Economists at the Ateneo de Manila University see Philippine economic recovery to be slow and “U-shaped” especially if the government will not ramp up stimulus spending for the healthcare sector and small businesses.
Economics professor and Ateneo Center for Economic Research and Development director Alvin P. Ang told an online forum last Friday that they expected it would take the economy two years or more to recover—“it’s not a swift recovery, but gradual.”
“There will be economic activities, but not as fast as what we want it to be,” Ang said.
Ang said a quick, “V-shaped” recovery would not be possible “because of the challenges we’re facing—most likely we’re looking at a “U”, hopefully not an ‘L.’”
Projections of Ateneo economists showed that gross domestic product (GDP) would shrink by 4.3 percent this year—the 0.2-percent decline in the first quarter was expected to be followed by contractions of 9.3 percent in the second quarter, 4.8 percent in the third quarter and 2.8 percent in the fourth quarter “assuming businesses are able to move freely,” Ang said.
For Ateneo economists, GDP would likely revert to positive growth in 2021 but only at 2.1 percent, before further inching up in 2022 to 3.4 percent.
The government had projected GDP to shrink within the range of 2 to 3.4 percent this year before bouncing back to a growth of 8 to 9 percent next year and 6 to 7 percent in 2022.
Ang said Ateneo economists were pushing for massive resources to be poured into testing, containment and health systems—“this is the only way to create confidence in our workers and business.”
Ang noted that while there was no problem with liquidity given a financial system flooded with money, businesses were not borrowing as many consumers remained immobile due to quarantine restrictions in place.
“We still need to put subsidy for the survival of businesses. This is basic business mindset: ‘Why will I borrow if no one is going to buy my product? So I need first to ensure that my business will survive.’ So that’s why [businesses should be] subsidized in the meantime to prepare,” including retrofitting and repurposing, which are expensive, Ang said. —Ben O. de Vera INQ