Economic grown claims too early
IBON disputes government’s recovery claims; says it will fall sans real stimulus
MANILA – Filipino think-tank IBON Foundation said the positive second quarter growth in gross domestic product (GDP) is only a rebound from the record economic collapse in the same period last year. It said in a statement it is not a sign of recovery gaining traction.
The group added growth will fall in the rest of the year because of the effects of economic scarring, continued lockdowns and “misguided fiscal conservatism are felt.”
It said the positive 11.8% growth during the second quarter of 2021 breaks five straight quarters of economic contraction and the relatively high growth rate is mainly because it is the first to be measured against the low base of when the lockdowns were at the worst last year, including a 17% contraction in the second quarter of 2020.
“However, year-on-year growth figures will worsen in subsequent quarters as this base effect fades,” they said.
In their statement, the think tank said the economic is stagnant as it is because seasonally-adjusted quarter-on-quarter growth is a clear indicator of momentum and the 0.7 in the first quarter of 2021 slowed to a 1.3% contraction in the second quarter.
They called on the government to address the basic issues for sustained high growth and assure the recovery at the soonest time. The economy was slowing even before during the pandemic and the lockdown-induced economic scarring of households and enterprises comes a top priority because it will drag recovery even as the vaccination proceeds and quarantine restrictions are eased.
IBON identified these as high unemployment, bloated low-paying or non-paying pseudo work, and collapsed family savings dampens the purchasing power of millions of households.
A significant number of enterprises either closed, suspended operations or partially operate will not easily reopen or expand.
They predicted restrictive community quarantines will continue “in the absence of serious efforts to expand testing, contact tracing, and targeted isolations. The group added herd immunity is still far from reality due to vaccine supply constraints and the emergence of the more contagious COVID-19 variants.
The possibility of implementing of harsh lockdowns remains.
“The government’s refusal to spend out of a misplaced obsession with creditworthiness is the binding constraint to real and rapid recovery,” they said. It added the net of interest payments, the P2 trillion in government spending in the first six months of 2021 is just 9.4% more than the P1.8 trillion spent during the same period last year which proves there is new stimulus to the economy.
IBON added this is less than the average annual growth in government spending since the beginning of the Duterte administration.
Meanwhile, Albay Rep. Edcel C. Lagman said the Duterte administration should not take priced prematurely on the 11.8% growth rate of the country’s Gross Domestic Product (GDT) because “it is not good enough.”
“The growth rate in the second quarter this year should have been 20.5% to equal the GDP in the second quarter of 2019 before the pandemic,” he said in a statement. He added the country’s economy which fell to a negative 17% in 2020 needs an annual growth rate of 10.5% in 2021 to bring back the economy to pre-pandemic level of 2019.
“This ideal average 10.5% GDP growth this year is unattainable considering that there was a negative 3.0% growth in the first quarter of 2021 and lower growth rates are expected in the 3rd and 4th quarters this year due to the lockdowns caused by the COVID-19 Delta variant,” he explained.
He added even the National Economic Development Authority (NEDA) projects an annual GDP growth of only 7.0% in 2021. (Melo M. Acuña)
Malls are kept open prior to the ECQ declaration but seldom do you see shoppers. Most are into supermarkets to buy basic necessities. (Melo Acuna Photos)