COVID-19 bites: PH revises economic targets
President Duterte’s final year in office became doubly challenging as the COVID-19 crisis reversed much of the prepandemic gains made toward the administration’s goals to sustain robust economic growth, reduce joblessness and move up to upper-middle income country status.
The pandemic last year inflicted the Philippines’ worst post-war recession as gross domestic product (GDP) shrank by a record 9.6 percent, while pushing the unemployment rate to a 15-year high of 10.3 percent or 4.5 million jobless Filipinos at the height of the longest and most stringent COVID-19 lockdown in the region.
The state planning agency National Economic and Development Authority (Neda) had taken stock of the prepandemic accomplishments while downscaling some of the more ambitious socioeconomic targets in light of the pandemic, through the Updated Philippine Development Plan (PDP) 2017-2022 it released early this year.
“Earlier in 2018, we achieved a record-low poverty rate of 16.7 percent of the population, achieving our target of lifting some six million Filipinos out of poverty four years ahead of schedule. If not for the COVID-19 pandemic, we would have become an upper-middle income country at the end of 2020, two years ahead of our 2022 target,” Neda chief and Socioeconomic Planning Secretary Karl Kendrick Chua said in the Duterte administration’s revised development blueprint.
“However, COVID-19 temporarily disrupted our growth momentum and development trajectory. To address this unprecedented crisis and save lives, the government made the difficult decision of imposing community quarantines in order to protect communities from the virus and beef up our health-care system. This disrupted the majority of our economic activities, leading to loss of income and jobs and temporarily reversing some of our economic gains from the first half of this administration,” Chua said.
This disruption in economic growth and poverty reduction was manifested in the downscaled socioeconomic targets for 2022.
For instance, the Updated PDP 2017-2022 targeted to reduce poverty incidence to 15.5-17.5 percent next year, a less ambitious goal compared to 13-15 percent at the start of the administration.
It also expects the unemployment rate to remain elevated at 7 to 9 percent this year and next year when President Duterte steps down from office. The original PDP 2017-2022 wanted to slash the jobless rate to 3-5 percent in 2022 from 5.4 percent in 2016.
Also, the Philippines’ target to climb to upper-middle income status next year will be more difficult as its gross national income (GNI) per capita last year dropped to $3,430 while the World Bank further raised the threshold across income groups.
According to World Bank data as of July 1, the Philippines’ GNI per capita amid last year’s pandemic-induced recession fell from $3,850 in 2019, reversing the upward trend prior to the COVID-19 crisis. It did not help that the upper-income threshold effective July 1, 2021 was further raised by the World Bank to $4,096-12,695 from $4,046-12,535 last year.
GNI referred to the total income generated by a country’s residents within and outside its borders. The Philippines’ GNI slid by a faster 11.1 percent last year compared to its record GDP contraction.
Despite criticisms that the government’s war chest against the prolonged pandemic was meager, President Duterte’s economic team maintained that fiscal prudence will shield the economy amid the protracted battle against the deadly coronavirus.
“At the start of this pandemic, I warned that the battle could be long. Considering this, it was important to maintain fiscal responsibility. We had to be ready for the long haul and keep our powder dry for a protracted battle. True enough, this pandemic has been a tough foe. Despite progress in the vaccination programs, countries around the world are still grappling with surges and spikes in infection due to the more contagious Delta variant,” Finance Secretary Carlos Dominguez III told members of the Financial Executives Institute of the Philippines (Finex) last week.
For Dominguez, who heads the administration’s economic team, “although the negative impact of the pandemic on the Philippine economy has been significant, this will be only temporary.”
Dominguez said the Philippines still had enough buffers to address the health and socio-economic crises inflicted by COVID-19.
“We never ran short of financial resources to look after our peoples health and safety. We have the fiscal means to support not just our COVID-19 response, but also our long-term economic investments,” he said.
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