The Philippine economy can still crawl its way to positive growth in the first quarter of 2020 but will suffer up to P1.1 trillion in revenue loss the entire year because of the COVID-19 pandemic, the country’s chief economist said on Thursday (April 30).
“My sense is that we have good potential to see a positive growth,” said Socioeconomic Planning Secretary Karl Kendrick T. Chua at a briefing for the Foreign Correspondents Association of the Philippines (Focap).
“We shouldn’t be surprised if the numbers are not to our best favor,” he said at the briefing held via the teleconferencing app Zoom.
“We entered the year with good foundations but we were stuck with three exogenous shocks that no one really expected,” Chua said.
Chua, who replaced economist Ernesto M. Pernia as head of the state planning agency National Economic and Development Authority (Neda), was referring to the eruption of Taal Volcano in January, the COVID-19 lockdown in China and the Philippine lockdown to fight the disease.
“All of these factors are basically affecting the prospects for very good GDP numbers,” he said.
“We’ll have to wait next week if we see better growth or slightly worse,” he added. “But I wouldn’t be surprised because we already know that has happened to the economy since January.
The government will report on first-quarter GDP performance on May 7.
For the entire 2020, the Cabinet-level Development Budget Coordination Committee (DBCC), via ad referendum, last month projected GDP to post zero growth or contraction by 0.8-1 percent.
The GDP growth assumption covered the impact of COVID-19 on consumption, exports, remittances, tourism and travel.
It also covered the impact of ongoing and extended lockdowns in Luzon and other parts of the country.
Chua said based on the surveys that Neda and the Department of Finance (DOF) earlier conducted among consumers and small entrepreneurs, the Luzon lockdown resulted in at least P700 billion in revenue loss.
At zero growth, the Philippines also stood to lose P1.1 trillion in output, Chua said.
Chua arrived at the figure upon computing the original 6-percent growth target for 2020 against nominal GDP of P18.6 trillion in 2019.
“We will continuously gauge this through monthly surveys,” he said.
The transition of lockdowns in some areas to Enhanced Community Quarantine (ECQ) to General Community Quarantine (GCQ) “might even be better for us,” Chua said.
But he cautioned against “making the wrong decision.”
“Some people are basically saying that we can lift the ECQ, let businesses resume,” he said. “But we already know from other countries that too hasty a decision can lead to a second or third wave” of infections.
“That is worse actually,” he said. “We would like to prepare better and recover and sustain that.”
He said the country would not want a recovery “followed by a sudden collapse again.” “That would be very bad,” he said.
The decision-making process on ECQ, he added, was very objective.
“We weighted the trade-off between the economic benefits and the health costs,” said Chua.
Based on that, he said, the Interagency Task Force on Emerging Infectious Diseases, formed to fight coronavirus, recommended to President Rodrigo Duterte the decision to keep ECQ in some areas and modify this to GCQ in others.
Edited by TSB
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