After two decades of uninterrupted growth, the Philippine economy appears headed for a recession this year.
Recession is “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in gross domestic product in two successive quarters.”
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said “the second quarter will probably be negative, the third quarter, maybe around negative and then we start picking up by the fourth quarter.”
The looming recession is an offshoot of the forced three-month shutdown of economic activities in the country’s major commercial and industrial areas to prevent the spread of the new coronavirus disease (COVID-19).
If it’s any consolation, the Philippines is not alone in this problem. The pandemic has wreaked havoc on the economies of other countries, including the developed ones, raising fears of a global recession.
In a recession, businesses experience less demand for their products or services forcing them to cut costs and retrench employees to avoid further losses.
According to Labor Secretary Silvestre Bello III, some five to 10 million Filipinos could be rendered jobless by the pandemic and the quarantine measures imposed by the government.
The textbook solutions to recession are increased government spending and reduced interest rates so more money can be injected into the economy.
With additional money in circulation, the economy’s growth is stimulated and, at the same time, act as foil to the usual reaction of the people to hold on to their money and defer spending or investment plans for fear the economic contraction may last longer than expected.
The government aims to reinvigorate the economy through the business stimulus bill pending in Congress that would, among others, give wage subsidies and extend interest-free loans to distressed businesses.
But minimizing the adverse effects of a recession, or better still getting out of it as soon as possible, is not the government’s responsibility alone.
The private sector or the public can help accomplish that objective in its own little ways and without unduly burdening itself.
For starters, let’s support the call of the Department of Trade and Industry to patronize local products. Every centavo spent to buy those products represents financial assistance to the Filipinos who made them.
An increase in demand for those products means additional employment, aside from the consequent increase in tax collections generated from their sale.
If only at this time when a recession is looming, Filipinos who believe anything imported is better than Filipino-made should change their mindset and look favorably at local products.
For Filipinos in the A, B and C sections of our society (or those with ample disposable income), this is a good time for them to splurge and not feel guilty about it. Or even enjoy it.
With the three-month lockdown confining them to the four corners of their houses, the easing of quarantine restrictions gives them the opportunity to go out, subject to the strict observance of medical protocols, and visit their favorite shopping centers and “refresh” their credit cards.
For those who enjoy gastronomic delights outside of their homes, their favorite dining places await them (with their face masks) and their orders.
And after enjoying the meals, give generous tips to the people who served them. The extra money could help them pay back the loans they may have incurred when they were out of job during the lockdown.
At first blush, these suggested spending sprees may appear out of place in a period of economic contraction when people are supposed to tighten their belts instead.
Yes, it might look that way, but for the people who stand to benefit from those spending, that would be heaven-sent because it means their continued employment and additional cash in their pay envelopes.