Philippine economy starting to make a ‘U-turn,’ says NEDA chief Chua

The country’s COVID-19 pandemic-battered economy is beginning to take a “U-turn,” albeit still in the negative territory, Acting Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) chief Karl Kendrick Chua said Tuesday.

“We are starting to see a U-turn in the trajectory of economic activity and manufacturing production. While we are not yet in the positive territory, we are hoping that we can continue to manage this recovery as best as we can,” Chua said in a statement.

Latest available data from the Philippine Statistics Authority showed that manufacturing and trade are beginning to show signs of recovery.

The volume of production index was -39% in April but improved to -19% by June.

Likewise, exports improved from -50% in April to -13% June.

Particularly, exports to China, one of the country’s largest trading partners, improved from -55% in April to a 2.8% expansion in June as the Chinese economy improves in the second semester.

Imports, which support both household consumption and business investment, also recovered gradually from a large contraction of -65% in April to a slower contraction of -25% in June.

The Philippine economy shrank 16.5% in the second quarter, its worst on record in almost four decades.

The two straight quarters - January to March and April to June - of negative gross domestic product (GDP) also brought the country to a technical recession, the first time since 1991.

The economic contraction was blamed on the months-long lockdown to control the spread of COVID-19 in the country.

Chua said the government’s recovery program is comprised of three big areas: the Bayanihan to Recover as One Act or “Bayanihan 2,” the Build Build Build program, and the 2021 budget.

Under Pillars 1 and 2 of the government’s phased and adaptive recovery approach, P655 billion pesos have been allocated to help people cope with the pandemic and improve the country’s healthcare system. This includes the ramped up spending to protect some 18 million low-income households and 3.1 million workers of small businesses.

“Moving forward, we are optimistic that the Bayanihan 2 will help the country bounce back from the crisis with its improved provisions on the healthcare system, public transport, and restoring consumer demand,” Chua said.

He added that the government will also provide equity support to distressed firms that are deemed strategic and allow banks to dispose of bad loans and assets so they can serve more businesses.

In addition, Chua said that the government is focusing on enhancing the productivity of the agriculture sector, as it also plays a crucial role in the country’s economic recovery.

“There's no way for the Philippines to complete its structural transformation if we don't make the agriculture sector productive. We have already taken huge steps through the Rice Tariffication Law and the Rice Competitiveness Enhancement Fund. We can also do more through our infrastructure and logistics programs,” he said. — RSJ, GMA News

Source: Peso Economics