Neda: It may take up to 2023 before PH economy returns to pre-pandemic output
MANILA, Philippines — The threat posed by the more infectious Delta variant of the SARS-CoV-2 coronavirus that causes COVID-19 may delay the Philippines’ return to pre-pandemic output to early 2023, the country’s chief economist said Thursday.
Socioeconomic Planning Secretary Karl Kendrick Chua told legislators at the start of deliberations on the proposed P5.02-trillion 2022 national budget that since the Development Budget Coordination Committee (DBCC) slashed this year’s economic growth forecast to 4-5 percent, gross domestic product needed to expand by over 9 percent next year so that nominal GDP could return to over P19 trillion.
In 2019, pre-pandemic, the goods and services produced locally amounted to P19.52 trillion.
When GDP shrank 9.6 percent — the worst annual economic contraction post-war — last year, nominal GDP slid to P17.94 billion.
The DBCC earlier projected 6-7 percent GDP growth for this year, but the economic team last week tempered their expectations after parts of the country, including Metro Manila, returned to the strictest COVID-19 quarantine restrictions this month to contain the spread of the more contagious Delta variant of the deadly coronavirus.
If the economy grew by 6-7 percent this year, GDP would return to pre-pandemic levels late next year.
But Chua, who heads the state planning agency National Economic and Development Authority (Neda), conceded that reverting to pre-pandemic output levels would entail GDP expansion faster than the targeted 7-9 percent growth for 2022.
“We may not hit pre-pandemic levels in 2022… maybe in early 2023,” Chua said.
Global financial institutions and think tanks had said that revert to pre-pandemic output in late 2022 would already make the Philippines’ economic recovery a laggard in the Asia-Pacific region.
Despite this challenge posed by the Delta strain, Chua remained optimistic that a safe reopening of economic activities with minimum health standards in place coupled with ramping up mass vaccination would sustain the inroads after posting year-on-year growth of 11.8 percent during the second quarter, owing to a low base last year at the height of the most stringent COVID-19 lockdown which stopped 75 percent of the economy.
“The sustainability of this growth in the coming quarters will depend on the actions that we will take in dealing with the virus,” Chua said.
“There is heightened risk right now because of the Delta variant. However, we deemed it more appropriate to balance both the COVID-19 risk and the non-COVID-19 risks, which include the people’s other illnesses that need to be addressed, their need for income to address joblessness, and also hunger,” the Neda chief said.
“Every time we declare a higher level of quarantine like the ECQ [enhanced community quarantine], we see the loss of jobs. However, a balancing of COVID-19 and non-COVID-19 risks, which allowed us to moderate our quarantine to GCQ [general community quarantine] or better, allowed us to create more jobs. As of June 2021, we have created a net of 2.5 million jobs compared to the pre-pandemic level. We will continue to monitor this because this is one of the important indicators that will underpin our recovery,” he said.
Chua said the two-week ECQ in Metro Manila, as well as in the provinces of Bataan and Laguna plus other localities early this month, inflicted P144 billion in economic losses per week, which would have pushed 161,000-242,000 more Filipinos to temporary poverty, and could have led to 607,000 job losses.
“However, because we have balanced this better right now, under MECQ [modified enhanced community quarantine] we are able to reduce the impact on the economy by half to P73 billion [in foregone output] per week; the number of poor people down to 82,000-123,000; and the number of workers that may be affected to 310,000. In other words, our imposition of quarantine does not come without costs — there are severe economic costs, and that is why our position is to manage this risk so that we can open the economy at the appropriate time,” Chua said.
The Inquirer Foundation supports our healthcare frontliners and is still accepting cash donations to be deposited at Banco de Oro (BDO) current account #007960018860 or donate through PayMaya using this link.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.