Acting NEDA Secretary Karl Kendrick Chua
While economic contraction eased to 11.5 percent year-on-year in the third quarter following a record second-quarter drop, the country’s chief economist sees more room for improvement during the last three months of 2020 with businesses widely enjoined to resume full operations and more mass transportation options being made available for workers.
Asked by the Inquirer if the pandemic-battered economy still underperformed during the July-to-September period with gross domestic product (GDP) growing by 8 percent quarter-on-quarter, Acting Socioeconomic Planning Secretary Karl Kendrick Chua on Tuesday replied that the turnout could be better as easing quarantine restrictions should have induced faster recovery compared to the second quarter when 75 percent of the economy stopped.
National Statistician Claire Dennis Mapa told a press conference that on a quarter-on-quarter basis, the agriculture sector posted a 1-percent growth, although a slightly slower pace than the 1.1-percent increase in output during the second quarter.
The industry and services sectors recorded a growth of 7.6 percent and 9.5 percent quarter-on-quarter, respectively, but still not enough to reverse the bigger 18-percent and 15.8-percent fall in the second quarter compared to their first-quarter output.
Chua, who heads the state planning agency National Economic and Development Authority (Neda), attributed the worse-than-expected year-on-year decline in third-quarter GDP to the two-week revert to stricter lockdown in Metro Manila and four neighboring provinces accounting for half of the economy in August, on top of the difficulty for workers to resume their jobs due to the lack of public transport.
Chua admitted to the Inquirer that business and consumer confidence was also initially a concern during the third quarter “given the uncertainty when we returned to MECQ (modified enhanced community quarantine) and workers and consumers could not travel to do their work and buy goods and services.”
However, Chua said consumers and businesses were now changing their attitudes “as we see significant improvement in our health system to treat the very sick and to detect cases,” pointing out that “some 90 percent of cases actually recovered already.”
In the case of businesses, the resumption toward 75 to 100 percent of their capacity “will have to be assessed on a firm-to-firm basis, but the policy now relaxes many restrictions that had prevented firms from operating at optimal capacity,” Chua said.
“We also proposed more work shifts and public transportation to help firms generate more businesses. The implementation of Bayanihan 2 and passage of remaining [bills in the recovery] package will all help businesses cope better,” Chua added.
Chua said he was hopeful that the three major industries comprising the GDP would post double-digit growth in the fourth quarter compared to their third-quarter performance.
Chua disclosed that Neda would be monitoring the economic developments amid the pandemic more on quarter-on-quarter basis “so we compare immediately from the previous quarter, rather than four quarters ago.”
The quarantine restrictions, for instance, were being adjusted on a monthly basis, depending on the progress in containing the disease per locality during the previous month.
Chua said the economic team will review the macroeconomic assumptions as the bigger end-September GDP decline may result in up to 11 percent unemployment rate this year on top of a 16-17.5 percent poverty incidence.
Malacañang said it was saddened by the 11.5-percent contraction of the economy in the third quarter of the year, but nevertheless believed the worst was over as this represented an improvement from the second-quarter slump.
“The economy has improved a bit, which shows that the worst is over,” presidential spokesperson Harry Roque said in a press briefing.
He attributed the recent numbers to the more restrictive modified enhanced community quarantine implemented in Metro Manila and the Calabarzon region in August to give the health-care system and its workers a breather from the rising number of COVID 19 cases in the country.
The government has to reopen the economy, he said, but people must continue to keep in mind that the COVID-19 threat remains and they have to continue observing health protocols, particularly the wearing of masks, the frequent washing of hands, and observing physical distancing. —With a report from Leila B. Salaverria INQ