The economy is hanging in despite the twin threats of the pandemic and rising commodity prices in the wake of the Russian invasion of Ukraine. The Philippine economy actually has more room to grow—it has not fully reopened since COVID-19 began two years ago while millions of workers have yet to reclaim their jobs.
Economic Planning Secretary Karl Kendrick Chua this week predicted confidently that the economy was on track to achieve the growth target of 7 percent to 9 percent in 2022, notwithstanding the sharp increase in crude prices and the escalating war in Europe.
Mr. Chua is relying on the strength of the domestic economy that has not reached its full growth potential. Most of the Philippines is still under Alert Level 1, meaning COVID-19 is still restricting the mobility of the people and preventing the full reopening of commercial establishments.
Schools, for one, have not fully reopened. Face-to-face classes have not resumed. The economy has not received any contribution from this sector, thus far. Consumer spending as a result is reined because both students and teachers are not participating in the economy. Fully reopening the economy or transitioning to the most relaxed alert level will create or restore many jobs and perk up consumer spending.
It is no surprise then that the inter-agency development Development Budget Coordinating Committee projected the economic growth at between 7 percent and 9 percent this year, stronger than the actual 5.6-percent expansion last year. The expansion will come from the domestic side as more sectors like travel and tourism reopen. The revival of domestic travel and the arrival of foreign tourists will immediately create a trickle-down effect on the countryside.
The Russia-Ukraine war, meanwhile, may initially impact the Philippine economy, especially domestic pump prices. The conflict, though, may not last. Moreover, the Philippines has limited trade links with Russia and Ukraine.
The Philippines’ economic expansion, thus, will be driven mainly by the domestic side. The people who have lost their jobs during the pandemic should now be allowed to rejoin the economy, along with the students and teachers who have been bottled up in their home for months.