The shift to Alert Level 1 in more parts of the country which began March 1 is seen to translate to P3 billion more in salaries per week, while it is estimated that there will be 170,000 less unemployed workers over the next quarter, the National Economic and Development Authority (NEDA) said.
Karl Kendrick Chua, socioeconomic planning secretary, said in a virtual briefing yesterday that the salaries of workers could even increase by a total of P5.2 billion per week if the whole country shifts to Alert Level 1, while there would be 297,000 less jobless employees over the next quarter under the said scenario.
“Hopefully, by next week the whole country will be under Alert Level 1. That is possible, if we cooperate and follow the minimum health standards,” Chua said.
The shift to Alert Level 1 in 39 areas starting yesterday is estimated to generate P9.4 billion per week of economic activity in gross value-added terms, Chua said. This estimate would increase to P16.5 billion if the whole country is placed under the lowest alert level.
If not for the pandemic, Chua said the size of the economy would have reached P25.3 trillion in 2022. With the shift to Alert Level 1, the economy is expected to recover to pre-pandemic level faster.
“We bounced back in 2021 with a 5.6 percent growth. We now have to recover the losses we experienced in the last two years amounting to P3.8 trillion. The shift to Alert Level 1 will help close this gap faster,” Chua said.
According to Chua, the shift to will further improve the performance of key sectors like tourism.
“The contribution of domestic tourism to the economy fell by P1.5 trillion or 7.4 percent of the GDP in 2020. We can recover at least half of that or P750 billion by shifting to alert level 1,” he said.
Meanwhile, a report by First Metro Investment Corp. and the University of Asia and the Pacific said the spike in COVID-19 cases due to the Omicron variant earlier this year as well as the corresponding restrictions placed is not enough to stall the country’s growth momentum.
Market Call said construction will likely reemerge as the key growth driver in the first semester as infrastructure spending accelerates prior to May 2022, since spending bans do not affect major projects.
It added the 2.7 million job gain in the fourth quarter should support optimism and growth in 2022, bolstered further by heavy spending towards the May 2022 elections.
“We do not think that the spike in COVID-19 Omicron variant cases, and corresponding stricter lockdown for three weeks in January would prove sufficient to retard the growth momentum established in the second half of 2021. We have observed lax enforcement of the lockdowns after a few days, and firms seemed less fazed by the renewed restrictions,” the report said.
“Besides, the scientific evidence appears that the Omicron variant, while more contagious, appears much less lethal and less demanding on hospital services,” it added.
The report said even with the usual second half easing during a presidential election year, gross domestic product growth for 2022 should take a faster pace of 6 to 7 percent, from 5.6 percent in 2021.
“We think the Bangko Sentral ng Pilipinas will keep policy rates unchanged until well into the fourth quarter of 2022, while the peso remains on a mild depreciation mode,” the report said.
The report, however, said a return to above 4 percent inflation could keep growth below government target.
“The economic recovery and sizzling crude oil prices should translate into record trade deficits both on a monthly and annual basis which would put added stress on the peso, already beleaguered by the strong US dollar and higher interest rates,” it said. – Angela Celis
