PH economy falls 11.5% in the third quarter

The Philippine economy contracted for three consecutive quarters as consumer spending and business activity remained depressed due to strict quarantines imposed on key economic centers to contain the spread of coronavirus infections.

The local economy, measured by the country’s gross domestic product (GDP), fell 11.5 percent from July to September this year, a reversal of the 6.3 percent growth in the same period last year, but smoother than the record contraction of 16.9 percent in the second quarter.

Acting Secretary for Socio-Economic Planning Karl Kendrick T. Chua said the re-imposition of a stricter community quarantine in Metro Manila as adjacent provinces and Cebu City in the third quarter hit the economy the most.

“The double-digit contraction in the third quarter is not surprising given the return of stricter quarantine measures in NCR and neighboring provinces, and Cebu City, which together account for about 60 percent of the Philippine economy,” he said. Chua.

Metro Manila, adjacent provinces, and Cebu City account for about 60 percent of the Philippine economy.

He also said restrictions on public transportation had dragged down the economy, preventing many workers from leaving their homes and reporting to work, even if their industries were allowed to operate.

Third-quarter GDP led the country’s January-September average to a 9.7 percent contraction, well above the government’s target of minus 4.5 percent to minus 6.6 percent.

The economy needs to grow 6.6 percent in the last three months of the year to reach an average contraction of 5.5 percent by 2020, which National Statistician Claire Dennis S. Map admitted is no longer feasible.

Despite the double-digit drop, Chua said that “the economic team is optimistic that the worst is over for the country,” and noted that the country can return to a solid trajectory of growth and development if it allows the economy to recover through efficient risk management.

“Our experience with COVID-19 in the last few months tells us two things. First, the economy is strong enough to recover, if we allow it. Second, our best resource to help the economy is to manage risks, ”Chua said.

“Managing risks, rather than avoiding them entirely, will allow us to safely open the economy further and help Filipinos regain their sources of income. This will also return the Philippines to its strong track record of growth and development, ”he added.

“The lower GDP contraction of 11.5 percent in the third quarter from a contraction of 16.9 percent in the second quarter indicates that the Philippine economy is improving. The path is clearer to a strong rebound in 2021, ”he added.

The economy has started to recover, Chua said, citing that on a quarterly basis, GDP grew 8 percent in the third quarter, reflecting the return of economic activities as the quarantine eased.

On the spending side, there were minor contractions in household consumption, business investment, exports and imports, which, according to Chua, indicates that households and companies are recovering.

In particular, exports of goods grew a positive 2.2 percent in September, as the economies of the country’s main trading partners in the region rebounded, the official said.

On the supply side, agriculture growth slowed to 1.2 percent as the sector faced a series of plant and animal diseases.

However, these headwinds had minimal effects on the overall food supply, as evidenced by the drop in food inflation in the same period.

Both industry and services also showed a lower contraction, consistent with the initial recovery in employment, where some 7.5 million workers returned in the third quarter.

This lowered the unemployment rate to 10 percent in July from 17.7 percent in April, when the quarantine was at its tightest.

Previously, the government approved measures to further open the economy in the fourth quarter, subject to enforcing minimum health standards and improving the Prevent, Detect, Isolate, Treat, Reintegrate strategy.

The Department of Commerce and Industry (DTI) and the Department of Transportation (DOTR), respectively, have also issued guidelines to allow more sectors to expand capacity by 75 to 100 percent and increase public transportation capacity.

Amid efforts to prevent virus outbreaks while easing restrictions on businesses and transportation, Chua also expressed that the economic team is hopeful that Congress will do its part to help the economy recover. faster by passing pending recovery bills during the year.

These are the General Appropriations Act of 2021 (GAA), the Tax Incentives and Corporate Recovery Act for Businesses (CREATE), the Unified Initiative of Government Financial Institutions for Troubled Businesses for Economic Recovery (GUIDE) and the Strategic Transfer of Financial Institutions (FIST) Act.

Chua also added that in the fourth quarter, the full release and utilization of Bayanihan 2 is crucial to improving the GDP outlook for 2020, while the General Appropriations Act of 2021 will provide the country with some of the strongest tools needed to rebuild the economy.

“Timely approval of the 2021 budget is crucial to help achieve the growth target of 6.5 to 7.5 percent for next year,” he said.