THE economy could contract by 0.6 percent or only grow by as much as 4.3 percent this year, if the adverse impact of the coronavirus disease 2019 (COVID-19) will be felt until June, and assuming that there are no mitigating measures in place, the National Economic and Development Authority (NEDA) said.
Thus, NEDA said the government’s swift and appropriate response remains crucial in softening the blow of COVID-19, particularly on the most vulnerable members of the society.
According to the report titled “Addressing the Social and Economic Impact of the COVID-19 Pandemic” which was completed March 19, given the simultaneous adverse effects on the supply and the demand side of the economy,
NEDA expects a cumulative loss of P428.7 billion to P1.36 trillion in gross value added (in current prices), equivalent to 2.1 to 6.6 percent of nominal gross domestic product (GDP) in 2020.
The report said the jobs of 116,000 to 1.8 million persons will be affected.
“Without mitigating measures, this would imply a reduction in the Philippine’s real GDP growth to -0.6 to 4.3 percent in 2020,” the report said.
“To reiterate, the estimates assume that the adverse impact will be felt until June, though the brunt will be felt during the one month enhanced community quarantine (ECQ). External trade, however, is expected to recover beginning March, though will still be affected by the ECQ,” it added.
NEDA also emphasized that attaining the upper bound of the 4.3 percent growth rate for 2020 is only possible if the government is able to stem the impact of COVID-19 and the ECQ to the rest of the economy.
“By extension, if the ECQ is extended beyond one month, or if the spread of COVID-19 is unabated even after the ECQ, then even the low-end of the estimate is still too high,” the report said.
NEDA estimates that the ECQ alone for one month could result in a loss of gross value added of P298 billion to P1.1 trillion, equivalent to 1.5 to 5.3 percent of GDP. This accounts for a reduction of employment of 61,000 to one million.
“During a crisis, it is best to plan ahead and avoid the worst-case scenario. We have crafted a comprehensive program of actions, learning from experiences and insights from various sectors and countries,” Ernesto Pernia, socioeconomic planning secretary, said in a statement yesterday.
“This program requires close collaboration among government instrumentalities from national to local, the business sector from micro to large, non-government organizations, and citizens alike. It is also necessary for us to think ahead even while we address the most urgent and critical challenges,” he added.
NEDA also pointed out the key to a successful medical response is widespread testing.
“This was the case of the dengue epidemic last year where the case recovery rate was higher than in the previous years, because of early diagnosis,” NEDA said.
“A patient who is diagnosed earlier could be given care to prevent secondary infections,” it added.
Moreover, NEDA said the early diagnosis will lead to early initiation of quarantine procedures and, therefore, limit or prevent the spread of the virus.
“This public health emergency brought about by COVID-19 shows us how crucial it is for us to have a whole-of-government and whole-of-society approach in addressing this challenge,” Pernia said.
“The response measures should delicately balance the health and economic objectives, particularly as the impact varies by economic class. Otherwise, the situation could deteriorate to a social and political crisis,” he added.
NEDA said it has proposed a three-phased program of interventions.
“The same framework can be used, though slightly revised, to consider the implementation of the ECQ,” it said.
“The funding requirements should then be determined in coordination with the relevant agencies, taking note that some measures will need to be undertaken right away (wherein some temporary solutions may be needed),” it added.
Meanwhile, Carlos Dominguez, Department of Finance secretary, confirmed to reporters through Viber that the government is preparing another stimulus plan, on top of the realigned government funds of P275 billion which will be used for COVID-19 response.
“Confirmed but no details yet,” Dominguez said.
Dominguez was also asked if the “Build, Build, Build” projects for the year will be affected given the situation on COVID-19, and he said: “We are not reducing the expenditure level of the 2020 budget.”
In a separate statement, the Department of Budget and Management said the Government Procurement Policy Board has simplified the government procurement process by issuing a guide for all procuring entities in the conduct of their procurement projects under a state of calamity due to the COVID-19 pandemic.
