Chua: Domestic demand, economic boost to shield PH from Putin war on Ukraine
Secretary Karl Kendrick T. Chua Photo: NEDA
MANILA, Philippines—The country’s chief economist on Tuesday (March 15) said domestic demand boosted by economic reopening will shield the Philippines from spillover effects of the Ukraine-Russia war and return gross domestic product (GDP) to 2019 levels in the first quarter of 2022.
“We have made significant progress in the past months in our fight against COVID-19,” said Socioeconomic Planning Secretary Karl Kendrick Chua at a press briefing.
“Our recent shift to alert level 1 in many parts of the country is estimated to generate an additional P9.4 billion per week of economic activity. Despite ongoing global tensions, we remain confident that the economy will recover to pre-pandemic level within the year,” Chua said.
Chua, who heads the state planning agency National Economic and Development Authority (Neda), said the economic team was pushing to move the entire country to the lowest alert level 1 while looking into proposals to dismantle all pandemic restrictions in Metro Manila and other areas under an alert level “zero” to protect the domestic economy from the impact of high oil and commodity prices wrought by Russia’s invasion of Ukraine.
Chua said placing the entire Philippines under alert level 1 will add P16 billion in output a week, while restarting all face-to-face schooling would increase economic activities by another P12 billion weekly. “We have a very strong potential to grow on the domestic front,” he said.
Chua said the economic team was sticking with the 7 to 9 percent GDP growth target for 2022.
“Unfortunately, we are facing global headwinds to our economy. We believe we have a very strong domestic economy that can withstand that,” Chua said.
“We also believe that the current global tension is temporary in nature. It will affect some people and some sectors, and we are ready to support the affected sectors,” Chua said.
The Neda chief was referring to the total of P6.1 billion in fuel subsidies and discounts to be given public utility vehicle (PUV) drivers and agricultural producers, respectively, which will be distributed across two tranches this month and next month.
Chua said the Ukraine-Russia war will hit the Philippines in four areas: commodity prices, financial markets, trade, and overall business confidence. Impact on the domestic economy would depend on “how long or how short this crisis will be,” he said.
“The most important is that we build on our domestic base. We are still far from achieving the normal life that we last saw in 2019,” he said.
“There is still a lot more that can be done from the domestic side — where we have control — to cushion any risk coming from the global side,” Chua added, noting that the economy was still short by P40 billion a week compared to pre-pandemic output.
For instance, Chua said business process outsourcing (BPO) workers ordered to return to their physical workplaces starting April 1 would add to economic output.
While Chua said he appreciated both BPO and non-BPO sectors’ contributions to the recovering economy, “part of going back to our ‘new normal’ is really to continue our pursuit of working where the activities should be,” citing Google mobility data showing 85-90 percent of most other sectors had already returned to their workplaces.
Since the Philippines is a net oil importer, targeted subsidies to those most badly hit by skyrocketing fuel prices amid tightening global supply would temper inflationary pressures locally, Chua said.
Chua said the prolonged pandemic likely kept the nationwide poverty level last year higher than the pre-pandemic rate, although only with a “slight increase.”
He maintained that targeted subsidies will keep vulnerable sectors from falling into temporary poverty amid the Ukraine-Russia war. “We will calibrate our subsidies and response to address this temporary concern.”
