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The COVID-19 pandemic not only ended decades of steady growth for the Philippine economy, it also plunged the country into its most severe recession since after World War II and even worse than the 1984 economic crisis that led to the removal of then President Ferdinand. Frames.
The inter-agency Development Budget Coordination Committee (DBCC) confirmed that economic output was worse than originally thought, as it lowered its projection of gross domestic product (GDP) from the original forecast of -4.5 percent. to -6.6 percent last July.
Banging 1984
The DBCC now expects the country’s economy of 19.516 trillion pesos to have contracted by a record 8.5 to 9.5 percent for the entire year, exceeding the 7 percent drop at the height of the 1984 economic crisis.
This means that the country’s economic output for the year fell by around P1.269 trillion from P19.516 trillion in 2019 to an estimated P18.247 trillion this year.
But economic managers in the Duterte administration expect an economic rebound next year with growth of 6.5 to 7.5 percent and a faster expansion of 8 to 10 percent in 2022 as more companies resume operations and more workers return. to their jobs.
To back up this hope of a return to growth, DBCC president and budget secretary Wendel Avisado told a press conference Thursday that the economic team will release a record P5.024 trillion cash budget by 2022, the final year. in the office of President Duterte.
The proposed 2022 national budget, 11.5 percent larger than the P4.5 trillion spending plan for 2021 pending in Congress, “will continue to prioritize funding for health-related responses and measures that will help accelerate the economic growth, ”Avisado said.
Acting Secretary for Socio-Economic Planning, Karl Kendrick Chua, said the worst GDP forecast was the result of worse-than-expected economic performance during the first three quarters.
GDP contracted by an average of 10 percent in the first nine months as the region’s longest and tightest COVID-19 shutdown brought 75 percent of the economy to a halt.
Additionally, the series of strong typhoons that devastated parts of the country over the past two months will reduce fourth-quarter GDP by 0.62 percentage points and full-year output by 0.17 ppt, said Chua, who heads the state agency for national economic planning and development. Authority.
The Philippines is also preparing for a prolonged rainy season due to the La Niña phenomenon, which could persist into the first quarter of next year.
The more optimistic outlook for 2021 and 2022, on the other hand, was due to expectations that most of the country will be under a less restrictive modified general community quarantine by next year and a COVID-19 vaccine would already be available, Chua said. .
Finance Secretary Carlos Domínguez III, who heads Duterte’s economic team, said the Philippines can afford to buy vaccines for 60 million Filipinos, which is equivalent to about P73 billion at a price of about P1,200 per person, citing initial estimates.
Domínguez said that the vaccine czar, Carlito Gálvez Jr., was considering purchasing the three types of vaccines currently being developed on the market, which would have different handling and logistics that the government had to address.
Clouded by the vaccine
That’s why Chua said the Philippines might have to remain in quarantine next year and that all restrictions will only be lifted in 2022 when a vaccine is already widely available.
Domínguez was confident of a rebound in the next two years, saying the economy has retained its productive capacity and the workforce will remain young compared to other countries.
The finance chief blamed the country’s current economic woes on consumers’ fear of contracting the virus. Roughly three-quarters of the Philippine economy was driven by consumer spending before the pandemic.
But once the pandemic is over, the economy “will skyrocket,” Domínguez said.
However, he said the Duterte administration will stick to its prudent spending tactic to keep the budget deficit under control.
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