2021: A year to hope (2)

Peter Wallace

January 14, 2021 12:00am

Zoom and webinar will be a fixture of the new business life, particularly so internationally. Why suffer the expense in time and money to travel to a different country when a few taps on a screen can get you together instantly at negligible cost? Physical travel will be for where reading body language is deemed desirable. Even domestically, virtual meetings will often triumph over hours in traffic. Conventions and conferences will become hybrid.

Work from home (WFH) has already become a permanent shift for much of office activity. Again, a hybrid is likely—work from home with some portion spent in the office. Central offices will be much smaller. And in some instances, smaller offices will move to where the employees are, rather than the employees moving to where the big offices are. For the more forward-thinking companies, work hours will be flexible. Already, there’s a beginning shift to four-day work weeks. Unilever in New Zealand is giving it a try for a year. Measuring worker performance by output rather than time spent will be part of that flexibility.

This will alleviate traffic to some degree, as will the well-conceived bus rapid transit system introduced on Edsa (promoted successfully by Eddie Yap), and hopefully soon on other major arteries. That, with a return to full bus and jeepney occupancy, will mean some lessening of the traffic chaos of yesteryear.

The early, unexpected retirement of Chief Justice Diosdado Peralta will put his reform agenda on hold as we enter the year. It will take some months under new leadership before we see what direction the courts take, and how successful they’ll be. No one disputes that the courts need major improvement. But history does not augur well for change.

Schools will begin to return to physical normal as we move through the year. Distance learning will gradually fade away, left for just remote areas where access to a school is difficult. It’s important that kids learn to mix with one another, and play sport together.

The year 2021 doesn’t suddenly open a new door of recovery and hope. But, with the now assured availability of a vaccine to fight it, it does point to a year of (slow) recovery. Vaccines will start to be supplied to those most in need—health care workers, the elderly, and those with underlying medical conditions, then indigenous people, the police, and military. Finally, the general population in 2022, 2023—enough people inoculated to provide herd immunity. A return to normalcy won’t happen in 2021 in the Philippines. Maybe in late 2022, or into 2023.

Some form of limits, probably a modified version of GCQ, and continued observance of health protocols are expected to prevail throughout most of the first half of 2021 as the cure for the virus is slowly, and cautiously, being made available in the market. So the level of economic activity will only be slightly better in 4Q20, gradually improving as we move through the second half. The timely passage of the national budget, which contains some recovery elements like increased spending on infrastructure and subsidy/guarantee to targeted enterprises, will be added assurance that growth will come.

Hence, we expect GDP to grow by 5-7 percent for the whole year 2021. At this pace of increase, however, activity will remain below pre-COVID-19 levels. Not just here, but throughout the world. The absence of discretionary spending as many people are just back to work or still have to rebuild depleted savings, not to mention the lingering fear of risking exposure to the virus, will impose limits to growth as demand for goods and services remains diminished.

At the forecast pace of growth of 5-7 percent, and given the -10 to -9 percent drop in 2020, the economy will still be about 5 percent below its pre-COVID 2019 level in 2021. Growth in 2021 will be an economy getting back on its feet. But as it’s coming from a low 2020 base, it won’t be enough to provide a return to the 2019 level. That will happen in 2022. The quality of life (and consumer purchasing power) in 2021 will remain below what it was in 2019.

So we move into 2021 with a sigh of relief: 2020 is over. A year when the bottom fell out of the world economy and left populations devastated. Inevitably, 2021 can only be better. But it will be a transition year. A year of struggling to recover, to return to a degree of normalcy—that we won’t achieve till the political year 2022.

------------------Email: wallace_likeitis@wbf.ph