THE country’s socioeconomic planning secretary remains hopeful the economy will post positive growth in the first quarter of the year, but noted there were multiple shocks during the period such as the eruption of the Taal volcano and the start of the coronavirus disease 2019 (COVID-19) outbreak.
Karl Kendrick Chua, National Economic and Development Authority secretary, also said in an online forum yesterday based on their recent surveys, economic losses brought about by the quarantine measures implemented to contain the spread of the pandemic, which put a significant portion of the economy to a halt, is estimated at around P700 billion.
“You know our target GDP (gross domestic product) growth for this year is 6 to 7 percent when we started the year. Unfortunately, we were hit by unexpected shocks that no one really knew will come,” Chua said in a forum organized by the Foreign Correspondents Association of the Philippines.
“What I’m seeing here is, I’m optimistic, or hopeful rather, that we would have growth above zero, but I’m not sure to what extent. My sense is that we have a good potential to see a positive growth, but we shouldn’t be surprised if numbers are not to our best favor,” he added.
Chua pointed out the economy entered the year with very good foundations but was struck with three unexpected shocks.
“The first one is the eruption of the Taal volcano, and that hit an area which is 50 percent of our GDP. Fortunately, Taal volcano did not erupt continuously and we were allowed some time to recover,” Chua said.
“The second one is basically the quarantine in China. When the COVID-19 cases in China escalated, that led to a decline in trade and tourism, and a lot of our economy depends on that,” he added.
Last is the enhanced community quarantine (ECQ) measure which is being implemented in Luzon since mid-March.
“All of these factors are basically affecting the prospects for very good GDP numbers. We’ll have to wait next week, if we’ll see better growth or slightly worse, but I wouldn’t be surprised because we already know what has happened to the economy since January,” Chua said.
The Philippine Statistics Authority is scheduled to announce the first quarter economic figures by May 7.
Meanwhile, Chua said based on the surveys gathered, the effect of COVID-19 so far, primarily because of the ECQ, is some P700 billion.
“In fact. another way to look at it is, as we know, we are not projecting in general a positive economic growth for 2020. Our base case assumption is that growth will be zero. In fact, it can be slightly negative. So if the GDP right now is P18.6 trillion, and we will not grow by six percent, then the loss that we are basically seeing is it can be P1.1 trillion,” Chua said.
“So those are the numbers that I’m translating for you based on the pronouncement that we think GDP growth will be flat. And so far, the survey seems to say that that is not very far off because the survey says around P700 billion in losses, according to the people we interviewed,” he added.
Carlos Dominguez, Department of Finance secretary, earlier said the economic team projects GDP growth to dive to zero to negative 0.8 percent this year.
“The only thing we’re sure of is we’re not really sure about the trajectory of the economy. And if you look at the growth projections of different institutions, you will see a large range and they are actually updating and revising daily,” Chua said.
“On the other hand, tomorrow is May 1 and you will see many provinces transfer from the ECQ status to general community quarantine, as announced by Malacanang recently. So that I think is a very clear indication that we are getting towards some end of the tunnel,” he added.
Chua said there’s a strong possibility of an economic rebound by June, thus the government can then begin the recovery phase.
“Other countries have seen resurgence or a second or third wave so we will be very careful with that. What is sure is we will not risk the health of the people when we open up the economy, we will be very conservative and careful and base any decision to further relax the quarantine based on a solid understanding of the trade off between the health and the economy aspects,” Chua said.
