THE Philippine economy is expected to contract sharply, even possibly posting a growth of as low as -0.6%, as the coronavirus disease (COVID-19) pandemic halts travel and tourism, subdues manufacturing and reduces consumption of non-essential items.
But if the enhanced community quarantine in Luzon is extended or COVID-19 continues to spread, a -0.6% growth would be too high.
The National Economic and Development Authority (NEDA), in a report released on March 24, 2020, said the simultaneous adverse effects of the pandemic on the supply and the demand side of the economy could result in a cumulative loss of P428.7 billion to P1.3556 trillion in gross value added (in current prices).
This would be equivalent to 2.1% to 6.6% of the nominal gross domestic product (GDP) in 2020.
NEDA said this would that the country’s real GDP growth could range from -0.6% to 4.3 percent in 2020.
This is on the assumption that the adverse impact of the pandemic will be felt until June and external trade would start to recover this month.
“The government’s swift and appropriate response remains crucial in the softening the blow of COVID-19, particularly on the most vulnerable members of our society,” the NEDA report said.
The Philippine economy contracted in 2019, growing by only 5.9%, the first sub-6% growth since the 3.7% in 2011.
“It also bears emphasizing that attaining the upper bound of 4.3% growth rate for 2020 is possible only if we are able to stem the impact of COVID-19 and the enhanced community quarantine to the rest of the economy,” the NEDA report stated.
“By extension, if the ECQ is extended beyond one month, or if the spread of COVID-19 is unabated even after the ECQ, then even the low-end of the estimate is still too high,” it added.
NEDA is proposing a three-phased program of interventions to soften the economic fallout from the COVID-19 pandemic:
Phase 1a: Clinical / Medical Response;
Phase 1b: Public Health Response;
Phase 1c: Short-term augmentation of health systems capacity;
Phase 2: Rebuild consumer and business confidence; and
Phase 3: Resume a new normal state of economic activity that is more prepared for another possible pandemic.
“During a crisis, it is best to plan ahead and avoid the worst-case scenario. We have crafted a comprehensive program of actions, learning from experiences and insights from various sectors and countries,” NEDA Director General and Socioeconomic Planning Secretary Ernesto M. Pernia said.
“This program requires close collaboration among government instrumentalities from national to local, the business sector from micro to large, NGOs, and citizens alike. It is also necessary for us to think ahead even while we address the most urgent and critical challenges,” he added.
To read NEDA’s full report, click here. (Ventures Cebu)