The government said it will “redouble” efforts to protect gains over the past three years, bring the economy to a strong recovery path and drive the country back on the road to inclusive growth amid the spread of the COVID-19 pandemic.
Finance Secretary Carlos Dominguez III gave the assurance to the institutional investors and fund managers as he expressed confidence the nation would eventually beat the pandemic and come out stronger from the unprecedented global health and economic crisis.
“The government continues to balance the reopening of the economy and efforts to restore consumer and business confidence with health and safety interventions so it can continue to protect lives in ways that do not prevent people from earning a living,” Dominguez said during the virtual session on the Philippine economy of Maybank’s Invest ASEAN Conference 2020 held via Zoom.
Dominguez said without continued and increased public-sector spending especially on infrastructure, public health and social protection, the Philippine economy would have performed much worse in the first semester because of the pandemic, with the gross domestic product shrinking by about 2.5 percentage points more than it did, or a total of 11.5 percent versus the actual 9 percent over the January-June period.
The economy contracted 16.5 percent in the second quarter, worse than the first-quarter drop of 0.7 percent, resulting in a first-semester GDP decline of 9 percent.
Dominguez said that given the uncertainties posed by the COVID-19 crisis, it would be difficult to make definitive pronouncements about the domestic economy’s longer-term prospects.
The Development Budget Coordination Committee projected a strong rebound in 2021 with a GDP growth rate seen to reach 6.5 percent to 7.5 percent.
“We will redouble our efforts to protect our economic gains over the past three years, prepare our economy for a strong recovery, strengthen our resilience, and solidify our return to the path of inclusive growth. I trust that you will continue to support us in these efforts,” Dominguez said.
He said that among the Philippines’ credit rating peers, the first-semester GDP decline of -9 percent reflected what was happening across the globe.
The first-semester contraction of Italy was 11.6 percent; Mexico, 10.2 percent; and Indonesia, 1.2 percent.
“We are not alone in our struggles, although the unique fiscal and macroeconomic strengths with which we entered 2020 will continue to provide us with solid footing as we confront our economic challenges,” Dominguez said.
He said signs of recovery were already emerging, as he pointed to the higher import volumes reported by the Bureau of Customs and the major gains of the Bureau of Internal Revenue from excise and value-added taxes in July.
Dominguez noted the slower annual declines in both volumes and values of the production index in June for key manufacturing enterprises compared to the months of April and May. The manufacturing capacity reached 73 percent in June, up from 72.4 percent in May and 70.5 percent in April.
He said total merchandise trade further eased its negative trajectory in June with a slower decline of 19.9 percent, after a steep 35.3-percent contraction in May and 59.5 percent in April.
Dominguez said the passage of a fiscally responsible Bayanihan To Recover As One Act, which was ratified by the Senate on Aug. 20, would provide another round of fiscal measures to stimulate consumer demand and support pandemic-hit businesses and individuals.
“If we can pass these critical reforms on time, we can help businesses in need sooner, and further improve the post-COVID-19 business climate. These critical reforms recognize the crucial role of a durable banking sector in ensuring that the rebuilding of the rest of the economy can be financed adequately,” Dominguez said.