NEDA reviewing GDP contraction estimates for 2020

The National Economic and Development Authority said it is reviewing the gross domestic product growth estimates for 2020, taking into account the impact of the COVID-19 pandemic on the second-quarter performance and the possibility of slow recovery in the succeeding quarters.

The inter-agency Development Budget Coordinating Committee earlier projected a 2-percent to 3.4-percent contraction this year because of the pandemic, a steep reversal of the actual 6-percent expansion in 2019.

“This [projection] is being reviewed.. We expect the second-quarter [GDP] to be worse than the first quarter [of 0.2-percent decline]. We see it more negative in the second quarter but slight improvements could be seen in the last two quarters,” acting Economic Planning Secretary Karl Chua said in an online briefing.

Chua said the impact of the enhanced community quarantine—mostly in the second quarter—imposed by the government to contain the spread of the disease was “more severe,” as it resulted in job losses and impacted the manufacturing and tourism industry the most.

“But we are seeing gradual recovery… Once we see the latest data there could be some adjustments [in projections]…,” Chua said. He said he was now seeing at least 75 percent of the economy open.

He said the Monthly Integrated Survey of Selected Industries statistics released in the past week showed that the manufacturing sector as a whole exhibited signs of recovery. “Despite the decline in the volume of production, we saw an increase in the capacity utilization of some of the largest sub-groups, like food and beverage manufacturing in May compared to April,” he said.

Chua said digital technology could significantly increase efficiency in business operations and public service delivery. He said online transactions would become the new standard for engaging with clients, buyers, and suppliers, therefore, both public and private sectors need to invest in digital technology.

He said the government, led by NEDA, was updating the Philippine Development Plan (PDP) 2017-2022, which aims for a healthy and resilient Philippines. Following its assessment of the impact of the COVID-19, an updated PDP will be released next month.

“As we transition to a new normal, the government will continue to support the recovery of the economy. We are closely working with Congress to pass the recovery program package, which includes both fiscal and financial sector provisions to support healthcare, as well as affected firms and workers,” he said.

“Opening up the economy and bringing back livelihoods safely require massive testing, including workers. For this, we support the decision to expand the testing protocol, to begin testing workers also, to bring back confidence to the economy. We also support the resumption of sufficient and safe public transport to facilitate the return to work,” he said.

A key provision in the proposed Bayanihan Act II is to finance the testing of around 10 million Filipinos, including workers, over the next 12 months. This requires increasing testing from the current peak of 22,700 to around 32,000 tests per day in the coming weeks.

Chua said this would be sufficient to bring down the positivity rate to below 5 percent. Increased testing, tracing, isolation and treatment are crucial to boost confidence, get people back to work and restore consumption demand.

Topics: National Economic and Development Authority , COVID-19 , Gross Domestic product , Development Budget Coordinating Committee , Philippine Development Plan , Karl Chua
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