Philippine economy

[ANALYSIS] The mad, reckless rush to reopen the PH economy

JC Punongbayan

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[ANALYSIS] The mad, reckless rush to reopen the PH economy

Graphic by DR Castuciano

'[T]rickle-down economics is essentially a scam, and Duterte’s men are hopelessly wedded to it. Give money directly to the people!'

In the past couple of weeks, Duterte’s economic managers have aggressively pushed to reopen huge swaths of our economy. 

None is more aggressive than NEDA Acting Secretary Karl Chua. Among other things, he wanted to put the entire country in the least restrictive quarantine mode (called modified general community quarantine or MGCQ) as early as March. He also wanted to allow more children and seniors (as young as 5 and as old as 70) to go out of their homes and spend.

On February 15, the government’s pandemic task force already allowed establishments like cinemas, arcades, museums, meeting/conference venues, and religious services to reopen or accommodate more people.

Local governments are following suit. Metro Manila’s mayors agreed with Secretary Chua’s nationwide MGCQ plan, and almost got their wish — until Duterte himself foiled it. Meanwhile, Cebu Governor Gwen Garcia has opened Cebu’s tourism sector, even going as far as dropping the need for negative COVID-19 test results among tourists.

All these policies are meant “to mitigate sickness, hunger, poverty, [and] job and income loss that are arising from non-COVID-19 cases,” said Chua. 

But the government’s economic team is reopening the economy far too quickly and recklessly, for several reasons. 

No vaccines

First and foremost, mass vaccination hasn’t even started yet.

To date, and quite embarrassingly, the Philippines remains the only ASEAN country without (legal) COVID-19 vaccines. Poorer neighbors like Lao PDR and Myanmar got their stocks first. Heck, even Afghanistan, Ghana, and Zimbabwe started vaccinating already.

The lack of vaccines was the reason Duterte gave when he thumbed down Chua’s proposal for a nationwide MGCQ. For a fleeting moment, Duterte looked more reasonable than his economic managers. But of course we all know who to blame for the continuing lack of vaccines. (READ: Duterte’s vaccine program is peak incompetence)

Sure, China’s Sinovac vaccines are scheduled to arrive first on Sunday, February 28 – but only after much delays, and we’re just talking of just 600,000 donated doses. 

Vaccine czar Carlito Galvez Jr. revealed that they’ve secured but 5.1 million doses for the first quarter of 2021. Considering they’re aiming to vaccinate 70 million Filipinos by year end, there’s still a long way to go, and they’re running out of time. 

More worrisome is the fact that vaccine hesitancy remains too high. Too few Filipinos are willing to take the all-important jabs, and too many were needlessly traumatized by the Dengvaxia scare stoked by Duterte himself and some of his allies a few years back. 

Vaccine hesitancy could prove to be the biggest hurdle yet for mass vaccination. (READ: Dengvaxia scare: How viral rumors caused outbreaks)

No aid

Duterte’s economic team is also reopening the economy as a way to avoid giving economic aid to Filipinos. 

You can see this in their less than lukewarm reaction to Bayanihan 3, an economic relief package that aims to give out P420 billion worth of transfers and loans to workers, small businesses, and other sectors ravaged by the recession.

In response, Chua said in Filipino, “I think Bayanihan 3 is no longer needed if we will further reopen the economy, which is the most efficient and cost-effective way to boost consumer confidence.”

There’s a number of problems with this statement. 

First, it distracts from the fact that government has utterly failed to give sufficient aid to Filipinos since last year. Sure, they gave out two months’ worth of cash transfers to poor Filipinos, totaling P200 billion or thereabouts. But as the recession unraveled, job losses piled up, and hunger reached a record high, they failed to hand out more aid — essentially leaving people up in the air.

Second, cash aid can, by itself, also boost consumer confidence and stimulate the economy. Economic managers constantly complain about inadequate spending. But for many Filipinos the problem is simply that they don’t have the money to spend — because they’ve lost their job, depleted their savings, received no remittances from abroad, or some other reason.

Even as certain sectors can’t fully reopen yet, putting money in people’s pockets seems a straightforward solution to a continuing lack of consumer spending. 

But the economic managers have found every reason to avoid doing so. In the past, they even used as an excuse the possible fallout on the government’s budget deficit and our credit ratings — things that ordinary people can’t very well eat or use to pay the bills.

While the economic managers are heartlessly scrimping on aid, they’re pushing to fast-track laws that will readily extend help to big business.

Finance Secretary Carlos Dominguez III and Chua have long pushed for the Create law, which will lower the corporate tax rate (it’s already up for Duterte’s signature). They’ve also advocated for the Guide bill, which will help select corporations weather the recession. And Duterte recently signed the Fist law, which will aid banks at this time. 

This alphabet soup of economic policies falls under the umbrella of “trickle-down economics,” which posits that helping the rich and big business will generate jobs and incomes from which the rest of the economy will benefit.

Reasonable though that might sound, trickle-down economics is essentially a scam, and Duterte’s men are hopelessly wedded to it. Give money directly to the people!

No consumer confidence

Finally, no matter how loose the quarantine restrictions are, Filipinos won’t go out of their houses so long as they’re afraid of the virus. 

The economy has in fact been fairly open since middle of last year. Yet Google data reveal that Filipinos still largely chose to hunker down in their homes and avoid public places, except last Christmas (Figure 1).

Figure 1.

Simply reopening the economy won’t do the trick. In the US, empirical research showed that states which opened prematurely failed to see significant increases in consumer spending or employment, at least compared to states that reopened later. Fear of the virus kept many Americans from going outside and spending as usual.

In the Philippines, although our country’s overall epidemic curve seems to have subsided, cases are alarmingly on the rise in some regions. In Cebu, for instance, a new “mutation of concern” was discovered and cases are shooting up (Figure 2).

Figure 2.

Facing suggestions that Cebu ought to be put under strict lockdown again, Cebu Governor Gwen Garcia said rather testily, “Don’t mess with us; we can take care of ourselves…. I will not and never again accept a lockdown. I will fight for Cebu and the Cebuanos because Cebu is moving on and moving forward.”

But I imagine it’s hard to “move forward” when cases there are rising as they are. And I doubt very much that tourists will flock to Cebu even when restrictions are looser than ever. The same goes for the rest of the country. 

False trade-off

Almost a year since the first lockdown, Duterte’s economic managers are still stubbornly framing the present crisis as a trade-off between public health and the economy. 

But they couldn’t be more in the wrong. Fixing the health crisis should be paramount. Absent mass vaccination, the economy can’t be expected to spring back to fighting form. Any attempt to reopen prematurely only endangers Filipinos’ health and lives.

At any rate, if they’re so confident with their own prescriptions, the economic team should be the first to watch movies without eating and bathroom breaks, ride the packed buses and jeepneys, or frolic with the whale sharks at Oslob.

This won’t necessarily mean their policies are correct or justified. But let’s see them walk their talk. –

JC Punongbayan is a PhD candidate and teaching fellow at the UP School of Economics. His views are independent of the views of his affiliations. Follow JC on Twitter (@jcpunongbayan) and Usapang Econ (

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JC Punongbayan

Jan Carlo “JC” Punongbayan, PhD is an assistant professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for He is also co-founder of and co-host of Usapang Econ Podcast.