Aftershocks and the trouble that we are facing

The shockwaves caused by the pandemic on our economy and political life indicates that we will come out as COVID-19 refugees and with each of us nursing an aftershock. 

The media failed to offer a focused reportage on the elements of shock that hit the government and the people. Hence, it tends to appear that the Duterte government is not suffering from acute distress. The evidence, however, is blindingly obvious – the system is struggling, and the situation demands a decisive leader and one who understands the politics of pandemics.

Acquiring an understanding of the nature of shocks and the potential aftershocks as a result of the outbreak has become essential for us. Shocks are distributed across time and space and its impact will certainly trickle down either gradually or immediately upon the expiration of the Enhanced Community Quarantine. 

Crisis specialists describes the shock that we are undergoing today as both covariant and idiosyncratic. “Covariant” is a type of shock that affects entire communities, regions, and even countries. On the other hand, “idiosyncratic” is a type of shock that affects the individual (us) or members of the household. We are equally experiencing these types of shock as a nation (macro level) and as citizens (micro level). 

The effects of an ongoing shock comes in the form of self-quarantine, work from home, tough regulation on mobility like curfew, and ban on travel, among others. But we are confronting multiple aftershocks at the idiosyncratic level because of the shock caused by the pandemic at the covariant level. 

An aftershock is inevitable even if we emerge triumphantly and virus-free after the lockdown.

First, economic shock is upon us. Bloomberg already raised the alarm by declaring that a 53% chance of a recession is up for the next 12 months. It defined recession as “two consecutive quarters of negative growth.” 

It is echoed by a Business World report which quoted Kristalina Georgieva, managing director of the International Monetary Fund (IMF), that the “global economy has now entered a recession — a period of economic decline where output falls for two successive quarters.” There are more finance institutions and economists who shared the same point of view. 

The country is not insulated from the downturn. No less than Bangko Sentral ng Pilipinas Governor Ben Diokno affirmed that economic recession is within arms reach when he said that the country’s economy will undergo negative growth for two consecutive quarters this year. Recession by all means.  

This particular aftershock might be cushioned especially if economic activity will resume as soon as possible or after the 30-day ECQ. Lifting the ECQ is ideal for the economy, but as COVID-19 cases continues to rise each day, it illustrates that the war against the virus is far from neutralized. In fact, it will be heightened by government’s inability to run tests. Massive testing has a slim chance. The index that demonstrate the lack of capacity is piling up and the invisible enemy will remain unchained beyond the 30-day ECQ.

Second, the shocks that enthralled us, and which continues to suck us today, is not enough. Expect more gripping aftershocks. 

The impact that the economic recession will deliver on jobs and on our income will shape social shocks and it will affect workers and their families this year. Unlike COVID-19, the transmission channel of shock will manifest in multiple forms: budget cuts on social protection and services; rearrangement on labor demand; and increased prices on goods and cost of services.

Once the ECQ will be extended for another month or two, the novel idea of working from home may become unsustainable because economic activity decelerated. The slowing down will start affecting the profit stream of employers and the ripple effect will come in the form of delayed salaries, unremitted benefits, or outright reduction of the workforce – a coping strategy that aims to lessen the impact of shocks on business.

Freelancers and workers of the informal economy will be heavily affected considering that they are at the bottom of the production hierarchy. The economy grinds because of the real work by women and men at the production line of vital industries that produces the goods that we consume or use. It will need time for these industries to fully recover from the disruption caused by the outbreak.

Some coffeeshop bystanders have issued a fearless forecast that big corporations will pour in impressive sums of money to spur economic activity. That is a positive news. But knowing the fact that the economy is globalized and that even the seemingly strong advanced economies like China, US and Europe were badly hit by the virus, that kind of optimism remains hanging on the balance.

Currently, we seem contented with the priority actions contained in the P27.1 billion relief package by the Duterte administration. The private sector is injecting more assistance with billions of pesos in the form of cash support and for the purchase of essential goods as part of its social responsibility. However, it is self-evident that all these is part of a calibrated effort as reflected by the intensive praise releases that goes with it.

The P27.1 billion relief package might help soften the suffering of the people from the first wave of shocks. Nonetheless, aftershocks is inevitable and it is waiting for its time. By far, it is conservative to say that we are facing more trouble post-COVID 19 crisis, but with no Duterte transition blueprint in the horizon, “trouble” might need a better sounding word if we intend to uplift our spirits this early.

*The opinion article has appeared at the Opinion Section of April 3, 2020. 

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