GDP drops to lowest ebb in four decades
Philippine economic performance drops 16.5 percent in Q2, now into technical recession
MANILA – The country’s Gross Domestic Product (GDP) growth rate dropped by at least 16.5 percent in the Second Quarter (April to June) this year said to be the lowest recorded quarterly growth from 1981 series.
In a statement released Thursday mid-morning, the Philippine Statistics Authority identified the main contributors to the decline were Manufacturing, 21.3 percent, Construction, -33.5 percent, and Transportation and Storage, 59.2 percent.
National Statistician Clair Dennis S. Mapa said it was only Agriculture, forestry and fishing which increased with 1.6 growth while Industry decreased by 22.9 percent and Services decreased by 16.8 percent.
On the expenditure side, major items that declined were Household Final Consumption Expenditure (HFCE) with 15.5 percent, Gross Capital Formation (GCF) 53.5 percent, Exports, 37.0 percent and Imports, 40 percent. Incidentally, the Government Final Consumption Expenditure (GFCE) achieved positive growth of 22.1 percent.
Net Primary Income (NPI) from the Rest of the World declined by 22.0 percent and Gross National Income (GNI) dropped by 17.0 percent.
The COVID-19 pandemic and the correspondent national government’s response through lockdown and strict quarantine measures affected the country’s 3conomic performance.
Philippine Chamber of Commerce and Industry President Ambassador Benedict V. Yujuico said Moody’s Analytics estimated an 8 percent contraction for Q2.
“BSP Governor Benjamin E. Diokno said 10-15% contraction would be tolerable. As President Trump would say ‘It is what it is,’” he said in statement sent to this writer. He said he cautioned PCCI members not to expect that Q3’s and Q4’s numbers would be significantly better.
“Now the announcement is negative 16.2%. Many believe that number is even understated as he referred to US numbers). The reality os that lockdowns address medical concerns not solve economic problems. Unless people are allowed to work and the economy opened, no economic improvement should be expected,” he further explained.
BSP Governor Benjamin E. Diokno said technical recession may become a reality should there be two consecutive quarters with negative growth rates.
IBON executive director Sonny Africa said the Duterte administration is to blame for the worst economic collapse in the country’s recorded history.
“Growth falling to -16.5% in Q2 from 5.4% in the same period last year is an unprecedented 21.9 percentage point drop,” he said. He explained all southeast Asian countries recorded their first cases of COVID-19 within weeks of each other around the end of January. The Duterte government’s incompetent response has made us not just the sickest country but also the weakest economy in the region,” Africa said.
Africa compared the country’s second quarter performance with other ASEAN countries, and said Singapore had 12.6%, Indonesia, -5.3%, Vietnam, 0.4% while Thailand and Malaysia have not released their official estimates though protected around -10 to -13%.
He attributed the pandemic’s worst impact due to the government’s slow, poor and incompetent response. He ;pointed out to the country’s “smallest COVID-19 response package in the region as monitored by the International Monetary Fund.
Africa added the government’s refusal to extend financial assistance to poor households as they kept harping about the creditworthiness and “more irrelevant BBB infrastructure offensive” aggravated by the lack of a meaningful recovery plan.
He said the Bayanihan 2 worth P140 billion is barely 0.7% of GDP.
“They even deceitfully bloat this by claiming P40 billion in corporate tax breaks of TRAIN2 which is also known as CREATE as a stimulus measure,” Africa added. He projects it may take two years or more for the country’s economy to return to the pre-COVID-19 era.
Asked of his projections to get out of the sorry situation, Africa said the government should contain the virus not by lockdowns but by rational testing, tracing and isolation, as well as extending financial assistance to improve household welfare and boost aggregate demand and sup)port for Filipino MSMEs with cheap credit and enterprise support.
“We initially estimate a P1.5 trillion recovery and reform package worth 7.7% of GDP is needed,” Africa concluded. (Melo M. Acuña)