Philippine economy plunges by 8.3% in Q4; 9.5% for 2020
The Philippine economy contracted by 9.5 percent in 2020 after the fourth quarter gross domestic product declined by 8.3 percent, the Philippine Statistics Authority said on Thursday.
The 2020 GDP rate was at the low end of the Development Budget Coordination Committee estimate of -8.5 to -9.5 percent.
While there was a quarter-on-quarter growth of 5.6 percent in October to December last year, National Economic and Development Authority acting Director General Karl Kendrick Chua, however, said "it also shows the limits of economy recovery without any major relaxation of our quarantine policy."
Metro Manila and some provinces in Calabrzon, which are huge contributors to the economy, have remained under general community quarantine along with a few other areas, preventing some businesses to fully reopen.
Chua, reading the joint statement of the economic team, said private consumption, which comprises some 70 percent of GDP, remained weak with a 7.2 percent growth.
"While the government relaxed the restrictions in the supply side by allowing more public transport and establishments to operate, restrictions on the demand side, notably on the mobility of children, and hence families, prevented private consumption from making a stronger comeback," he said.
Last week, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases had approved to relax the age restriction by lowering it to below 10 years old for those who should remain at home from current below 15 years old to 65 years old.
But last Monday, President Rodrigo Duterte overruled the IATF decision, saying that 10 to 14-year-old children should not go out due to new variant of coronavirus disease in the country.
Chua said Duterte made the right decision of postponing the easing of age-based restriction as the economic team will make again a recommendation once the situation improves.
For the fourth quarter of last year, all three major economic sectors contracted - agriculture by -2.5 percent; industry, -9.9 percent; and services, -8.4 percent.
On an annual basis, agriculture shrank by -0.2 percent; industry, -13.1 percent; and services, -9.1 percent.
PSA head Undersecretary Dennis Mapa said growth rates of gross national income and net primary income from the rest of the world both declined at a rate of -12.0 percent and -53.2 percent, respectively, in the fourth quarter last year; while on an annual rate, -11.1 percent and -27.3 percent, respectively.
Despite the GDP contraction last year, the economic team expressed optimism that the economy will recover this year by hitting 6.5 to 7.5 percent growth and by 8 to 10 percent in 2022.
"The Duterte administration’s efforts to increasingly open the economy while taking resolute steps to fast-track the vaccination program and keep the COVID-19 caseload to the lowest level possible, would boost business and consumer confidence that are crucial to a robust economic recovery," said Chua reading the joint statement.
"All of these efforts to contain the coronavirus and revive the economy will allow us to prevent long-term economic scarring and productivity losses and recover to the pre-pandemic level by mid-2022," he said.
The government is targeting to start the COVID-19 vaccination this coming February, with the hope to inoculate 70 million Filipinos to achieve herd immunity.
To attain the long-term economic recovery, Chua said Congress should pass not only the key economic bills but other pending measures, which are doable to attract more direct investments and create more and better jobs.
"We urge our legislators to swiftly pass the amendments to the Public Service Act, the Retail Trade Liberalization Act, and the Foreign Investment Act. All these are crucial in revving up the Philippine economy and sustaining its recovery," he said.
The other priority economic bills that the Duterte administration wants Congress to pass are the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, Financial Institutions’ Strategic Transfer (FIST) bill, and the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill, among others.
Meanwhile, Presidential Spokesperson Harry Roque, in a televised press briefing, reiterated the government's call to the public to follow the health protocols in order to contain the spread of COVID-19 and allow the economy to reopen. Celerina Monte/DMS
