Return to MECQ to weigh down economy in short term but improve productivity —NEDA chief

The return of the National Capital Region - the Philippines’ main economic hub - to modified enhanced community quarantine (MECQ) is seen to have a short-term impact on the economy, which has been battered by months-long lockdown due to COVID-19, the National Economic and Development Authority (NEDA) said Wednesday.

President Rodrigo Duterte placed Metro Manila, Laguna, Cavite, Rizal, and Bulacan under MECQ from August 4 to 18 following pleas of the medical community for a “time out” amid rising COVID-19 cases being admitted to hospitals.

“The return to MECQ in these areas is a difficult but important decision. Although this is expected to weigh down on the economy in the short term as resumption of business operations is limited, this will give our health system some respite amid the recent rise in COVID19 cases,” Acting Socioeconomic Planning Secretary and NEDA chief Karl Kendrick Chua said in a statement.

“It will also help improve productivity in the near-term as more lives are saved and consumer confidence restored,” Chua said.

The NEDA chief said that with the rising COVID-19 cases in the country, the strict enforcement of containment measures by both government and the private sectors need to go hand in hand with the efforts to gradually reopen the economy to ensure that jobs and income are protected.

“The administration will pursue the swift passage of the Bayanihan II bill. The bill allocates P50 billion to government financial institutions as capital infusion for the grant of low-interest loans and credit guarantees to micro, small and medium enterprises (MSMEs),” Chua said.

“It will also support strategically important and distressed firms. The bill also allocates P90 billion to support the healthcare system and the hardest hit sectors through targeted subsidies,” he added.

The state planning chief added that the government also aims to assist in improving the resilience of business establishments under the new normal by providing technical assistance on business continuity planning and capacity building on new competencies, such as digital skills, digitalizing operations, and entrepreneurial mentoring, among others.

“The two-week MECQ will allow the government to reassess approaches, procedures, and response protocols and capacities that may need to be improved to better contain the spread of the virus while ensuring that the gains from reopening the economy are not fully reversed,” he said.

Chua also said that government efforts will continue to focus on realizing structural reforms and supporting needed legislation to ensure that businesses will be supported as the economy recovers.

“NEDA has been working closely with relevant departments and both houses of Congress to prioritize reforms that will help the economy recover, promote competitive playing field, and allow firms to maximize productive capacity,” he said.

By TED CORDERO, GMA News

Source: Peso Economics