PH ends recession with 11.8% Q2 growth
MANILA, Philippines — The Philippines ended its longest recession since the 1980s debt crisis after the economy grew by 11.8 percent in the second quarter this year, the government reported on Tuesday.
While it may look impressive, the year-on-year growth—the fastest in 32 years or since the 12-percent expansion in the fourth quarter of 1988—was mostly due to what economists call low-base effects.
The second quarter of 2020 was the height of the pandemic and the lockdown from mid-March to May brought two-thirds of the economy to a standstill and resulted in a record 17-percent decline in the gross domestic product (GDP). With such a very low base with which to compare the second-quarter GDP, economists had already expected a double-digit growth.
In fact, the second-quarter GDP was 1.3-percent smaller than the economic output in the first three months of 2021, reversing three consecutive quarter-on-quarter gains that the economic team had earlier touted as an indication of a recovery.
Still, it ended the recession. “This is good news. This shows that amid the pandemic, [our efforts in] taking care of lives to save livelihoods [paid off],” presidential spokesperson Harry Roque said in a press briefing on Tuesday.
For Socioeconomic Planning Secretary Karl Kendrick Chua, the robust performance was driven by more than just base effects, saying it was the result of a better balance between addressing COVID-19 and the need to restore jobs and incomes of the people.
National Statistician Dennis Mapa told a press briefing that the industry sector grew by 20.8 percent, reversing the 21.8-percent drop a year ago. Services also reverted to 9.6-percent growth from the 17.1-percent decline last year. In the case of agriculture, however, the second quarter’s 0.1-percent contraction reversed last year’s 1.6-percent growth.
Chua attributed the growth in industry and services to better management of COVID-19 risks and easing of quarantine restrictions.
On the expenditure side, he said total investments grew by 75.5 percent, driven by the near doubling of private investments growth to 94.9 percent, indicating improvements in business confidence as the economy learned to live with the virus.
The chief of the National Economic and Development Authority said that both public and private construction activities posted year-on-year growth during the second quarter, alongside the return of household spending to positive territory with its 7.2-percent increase.
Is it sustainable?
However, two administration senators on Tuesday said there was no telling if the second-quarter growth was sustainable.
Sen. Grace Poe noted that the expansion was “nothing to brag about” since the base was the 17-percent contraction in 2020.
“Let’s not lose sight of the fact that still, it isn’t back to prepandemic levels,” she said in a text message to reporters.
Poe said what the Filipino people urgently needed was for the government to spend their tax money on the health sector by paying the hospitals and health-care workers, while protecting and creating jobs.
“Then and only then can these growth numbers mean anything,” she said.
Sen. Joel Villanueva said it was too early to tell if the growth was sustainable, considering that many parts of the country, including Metro Manila, were under lockdown that severely limited economic activities.
“Our recovery is hinged on our ability to control the spread of the virus,” the chair of the Senate labor committee told reporters on a Viber thread.
Senate President Pro Tempore Ralph Recto predicted that the economy would grow by only 4 percent for the whole of 2021 and take one or two years to recover to its 2019 levels.
Vaccination is key
House tax chief Joey Salceda on Tuesday said that while the country’s emergence out of economic recession was a positive development, it was “no indication that people are having it easier economically.”
“If we are able to stop Delta in its tracks and avoid the kind of surges Indonesia and other Asean neighbors are experiencing, we will perform very strongly in (the second half of 2021),” Salceda said in a statement.
He pointed out that the fast rollout of COVID-19 vaccines in the country and the mitigating measures against the more infectious Delta variant would determine whether the country could sustain the recovery in the second half of 2021.
“We have to get it right. If we do, we will permanently be out of the hole. If we get the health side wrong, we’re still very much at risk of contracting again,” Salceda said.
He cautioned the government not to be complacent, citing that “being out of the recession simply means we stopped our streak of negative growth.”
In a statement, House Majority Leader Martin Romualdez welcomed the latest economic growth, saying it was a good decision for the administration to ramp up COVID-19 vaccination.
But Gabriela Rep. Arlene Brosas warned against hyping the economic growth.
“The slightest uptick in the economy will be magnified precisely because the base or reference growth during the past year is too low,” Brosas said in a statement.
The opposition lawmaker said hunger remained at an all-time high and millions were still jobless.
—WITH REPORTS FROM JEROME ANING, NESTOR CORRALES AND DJ YAP
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