PH showing signs of recovery despite negative growth – economic managers

MANILA, Philippines — The performance of the economy in the first quarter of this year is reason enough to be optimistic that it will recover from its current contraction amid the COVID-19 pandemic, according to the heads of the administration’s finance cluster.

The managers noted that the negative 4.2% gross domestic product growth for the first quarter of this year was an improvement over the negative 8.3%  recorded in the fourth quarter of 2020 — a sign that the economy was “on the mend.”

The economic managers who issued the statement were Socioeconomic Planning Secretary Karl Kendrick Chua, Finance Secretary Carlos Dominguez III, and Budget Secretary Wendel Avisado.

“This time around, we also have much more latitude. Unlike last year’s enhanced community quarantine (ECQ), the government is taking a more calibrated approach to the present quarantines by addressing the highest sources of risks,” the managers said in their statement, which was posted on Wednesday on the website of the National Economic and Development Authority (NEDA).

On Tuesday, government statisticians said the economy was enduring its longest recession since the foreign debt crisis in the 1980s. The quarantine restrictions imposed in March due to a surge in COVID-19 cases have prevented the economy from fully operating, they noted.

Though an improvement, the first-quarter GDP of negative 4.2% is way worse on a quarter-on-quarter basis — that is, compared to the negative 0.7% GDP growth in the first quarter of 2020.

In 2020, the economy posted a GDP of negative 9.5% — the worst ever recorded since the end of the Second World War.

Still, the economic managers noted milder contractions on the production side, for both industry and services. This, they claim, was indicative of a recovery, fueled by a strong crop production — specifically rice — that pushed agriculture performance from negative 2.5 percent in the fourth quarter of 2020 to just negative 1.2 percent in the first quarter of 2021.

“However, the livestock industry saw a 23.2 percent drop as the African Swine Fever (ASF) continues to hit the hog industry hard. To address this, the government has been decisive in lowering the tariff rates and increasing the minimum access volume (MAV) for pork as a temporary measure to address the supply deficit and bring down soaring prices of pork,” they explained.

“As the economy rebounds in the coming months, we expect business confidence to return, thereby giving private construction further impetus to recover,” they added.

Economic indicators are not yet expected to improve soon, especially as work has been hampered by stricter lockdowns since late March due to a surge in COVID-19 cases caused by new variants.

Still, COVID-19 cases have steadily gone down. As of Wednesday, the nationwide active case count was 53,214.

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