Managing the fallout from the covid-19 crisis

PHILIPPINES - In Brief 15 May 2020 by Romeo Bernardo

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After revising its GDP growth target to a more realistic -2 to -3.4%, government is now crafting its economic recovery program in consultation with private sector stakeholders. I have been asked to provide feedback on the draft Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO), presented by Planning Secretary Karl Chua in a virtual meeting with Manila’s top financial executives. Below I share with readers my brief commentary. I agree with Secretary Karl that the Philippines is better situated than many emerging countries to cope with this crisis given its stronger macroeconomic fundamentals, a product of building on past reforms across a wide front. I would particularly underline the tax reform law (TRAIN) and rice tariffication law. However, this plague has changed the game radically. It would not be an exaggeration to call this the existential challenge of this generation, not just for the Philippines but globally. And while the Philippines has weathered past crises and learned from them, e.g., the 1997 Asian Financial Crisis, the 2008/09 Global Financial Crisis and the debt-cum-political crisis of the mid 80’s, this one is arguably more fearsome. The analogy made in the U.S. is between “Main Street and Wall Street”, i.e., that a pox that affects the real economy will be more devastating to every Juan and Juana than one that originated from planet Finance. This is all the more true given: (a) continuing uncertainties about the evolution of the virus, its spread and how long it will take for a cure or a vaccine to be developed; and (b) the characteristics of the Philippines and our people, e.g., high density in Metro Manila in particular the lar...