Age-based restrictions taking toll on economy, says NEDA chief

The prolonged policy to keep children inside their homes to prevent them from contracting COVID-19 is already taking its toll on the country’s economic recovery, the country’s chief economist said Friday.

During the Foreign Correspondents Association of the Philippines’s (FOCAP) virtual forum, Acting Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) chief Karl Kendrick Chua said that the Philippines is already seeing the detrimental effect of age-based restrictions.

“Our GDP (gross domestic product) growth was -9.5% and that’s quite far from many other countries,” he said.

Strict quarantine restrictions which began mid-March 2020, considered the longest in the region, has put the economy on a standstill stripping off an annual income loss of P1.4 trillion or P2.8 billion a day from the economy.

With this, the country’s 2020 GDP was dragged to its worst performance on record at -9.5% due to the COVID-19 crisis.

This is its worst full-year contraction since 1998 when the economy shrank by 0.5% due to the Asian Financial Crisis.

Chua explained that the Philippines is a very young country in terms of population, which means age is 25 years old.

“Fifty-four million people are below 25 years old and 40% of the people are below 20 years. If we prevent the mobility of these people who are very important in this demographic dividend economic led country, you can imagine the number of establishments and economic activities that are not fully operating,” the NEDA chief said.

“If the children cannot go out even for school then the families cannot go out and because 50% of essential retail is driven by families as opposed to individuals or workers then you see the outcome,” he added.

Currently, only those 15 to 65 years old are allowed to leave their homes for both essential and non-essential purposes.

President Rodrigo Duterte revoked the Inter-Agency Task Force on COVID-19’s earlier decision to allow minors aged 10 to 14 years old to go out in areas under modified general community quarantine due to the threat of the more transmissible UK variant of SAR-COV-2, the virus which causes COVID-19.

Chua said Duterte made the right decision in keeping age-based restriction at the moment.

“For the time being, because of the COVID risk from the new variant we really have to take it easy for this aspect for now,” he said.

However, the NEDA chief said that having a “blanket restriction,” instead of being more open but with safeguards is not going to work.

“I was consulting with the World Bank and I understand that no country has a policy that keeps the children at home,” he said.

Nonetheless, the NEDA chief said the economic team will continue to monitor and balance the economic and health factors so that policy-makers can make better and more informed decisions concerning the matter.

“We will regularly monitor both the health data and economic data every two weeks [so] we can come up with a better and informed decision... where we can make minimal or gradual changes,” Chua said.

“We will do that incrementally and as carefully as possible,” he said.

He emphasized that the economy cannot grow further if age-based restrictions will continue for long since  50% of non-essential sales are driven by families and their children.

“That is why in 2021, our recovery will also hinge on relaxing the restriction on the demand side,” he added. -MDM, GMA News