Image source: Colliers
The coronavirus has lowered the development of efforts by the administration of Philippine’s President Rodrigo Roa Duterte to strengthen the economy, ensure more employment, and become an upper-middle-income country, forcing the Philippine government to rethink its approach in handling the economy as Duterte steps down next year.
The Philippine Daily Inquirer has reported today that the outbreak of COVID last year caused the gross domestic product or GDP of the country to shrink by 9.6 per cent and drive about 4.5 million workers out of employment, sending the worst recession in the country since the Second World War ended.
The National Economic and Development Authority or NEDA, the planning agency of the Philippine government, has released this year an updated version of the Philippines Development Plan or PDP for 2017 to 2022, listing the projects made before the outbreak while revising some policies for the economy due to coronavirus.
NEDA chief and Philippines Socioeconomic Planning Secretary, Karl Kendrick Chua, said in the plan that the administration of Duterte has reduced the rate of poverty to only 16.7 per cent of the population, improving the lot of some six million people four years ahead of schedule.
Chua added that the country would have had an upper-middle income at the end of 2020, two years ahead of its target year, if coronavirus never interfered.
He said, “However, COVID-19 temporarily disrupted our growth momentum and development trajectory. To address this unprecedented crisis and save lives, the government made the difficult decision of imposing community quarantines in order to protect communities from the virus and beef up our health-care system. This disrupted the majority of our economic activities, leading to loss of income and jobs and temporarily reversing some of our economic gains from the first half of this administration”.
Changes in some approaches to socioeconomic matters show the disruption by the outbreak on economic growth and reduction of poverty, as exemplified by seeking to reduce the rate of poverty by 15.5 to 17.5 per cent from 13 to 15 per cent when Duterte became president.
The original version of the plan was for 2017 to 2022, sought to cut the rate of unemployment from 5.4 per cent in 2016 to 3 to 5 per cent in 2022, but the updated version expects the jobless rate to stay high from 7 to 9 per cent for this year and next year when a new president takes office.
Data from the World Bank on July 1 reported that it raised the upper-income threshold from $4,046-12,535 last year to $4,096-12,695, while the Philippines gross national income or GNI per capita last year plummeted from $3,850 in 2019 to $3,420.
This reversed the upward trend of its GNP before the outbreak, with its GNP sliding by 11.1 percent last year compared to the contraction of its GDP, thus increasing the difficulty for the country to achieve the upper-middle-income country next year.
The gross national product is the sum of incomes made by the people of a certain country within and outside its boundaries.
The economic team of President Duterte advised fiscal prudence to protect the economy from the effects of coronavirus amid accusations of using meager measures against the pandemic.
Philippines’ Secretary of Finance, Carlos Garcia Dominguez warned in a meeting with Financial Executives Institute of the Philippines or Finex that stamping out coronavirus will take a long time, advising fiscal responsibility to carry on amid the ongoing restrictions due to the outbreak, given the increases in cases of the more contagious Delta variant despite the increase of vaccinations.
Heading the economic team of the current administration, Dominguez reassures the members of Finex that the effects of the outbreak will only be temporary despite its negative impact, adding that the Philippines still has enough buffers to address the crises caused by the spread of coronavirus.
He said, “We never ran short of financial resources to look after our peoples health and safety. We have the fiscal means to support not just our COVID-19 response, but also our long-term economic investments”.