Trade Secretary Ramon Lopez yesterday said economic recovery has been slow even as a big part of the economy has reopened.
Lopez also admitted lockdowns have taken longer than expected.
Lopez told a Senate hearing on the 2021 budget of the Department of Trade and Industry (DTI), six months since the quarantine in March, 6 percent or 90,000 of the 1.5 million enterprises registered with the DTI remain closed as of September and 2.2 million workers had been displaced by the pandemic as of July.
Lopez’ solution is for the full reopening of the economy though still under strict health standards.
“We were hoping the economy will recover quickly but it has been six months and business confidence has gone down from 30 to 20 percent. It turned out to be slow recovery,” he said.
While sectors have opened, Lopez said “it is not a rosy picture in business confidence and unemployment although there are improvements.”
“What we are pushing for as much as possible is that with strict enforcement and minimum health standards,
we should reopen. That is my appeal. This is not popular to heath workers but if we keep strict enforcement on health standards, standards we can safely reopen,” he added.
Lopez said opening at full capacity will help in generating employment, providing income that will stimulate demand and encourage business expansion which will eventually take the economy to recovery.
Stockbrokers shared Lopez’ sentiment in conjunction with the latest business and consumer confidence survey of the Bangko Sentral ng Pilipinas that showed business confidence towards the economy turned negative with confidence index falling from the first quarter’s 22.3 percent to this quarter’s -5.3 percent. Consumer confidence at the same time a record low of -54.5 percent for the quarter while outlook for the fourth quarter remained negative at -4.1 percent.
SB Equities said there is a “sense” of business optimism on the economy for the last quarter of the year, “but may not be enough to pull the GDP growth rate back up to positive territory.”
SB Equities Inc. remains firm the third quarter will post an 8-percent contraction while the fourth quarter will clock in a 5.5 percent contraction.
Philstocks Financial said a downbeat confidence from both consumers and businesses “is expected to slowdown economic recovery.”
“A low household confidence may lead to low consumer spending which would weigh on business earnings and on aggregate demand. A low business confidence on the other hand may lead to a slowdown of investments, more expansion plans shelved, in turn leading to a slowdown in the capital formation building of our economy which is crucial for further growth,” it said.
“We find positive correlation between consumer confidence and household consumption growth, with the former serving as a robust predictor of the latter,” it said.
SB Equities said consumers play a predominant role in the country’s economy with household consumption accounting for at least 70 percent of GDP. (I. Isip and R.Castro)
