The Department of Finance (DOF) said the country’s economic recovery is “not smooth” due to continued restrictions that dampened consumer and investor sentiment.

In his latest economic bulletin, Finance Undersecretary and Chief Economist Gil S. Beltran explained that consumers and investors will be hesitant about spending as long as movement restrictions are in place.

Citing recent data on merchandise trade and manufacturing purchasing managers’ index (PMI), Beltran noted that the country’s economic recovery is “not smooth” based on August, September and October indicators.

Total merchandise trade declined at a much slower pace in September at 8.2 percent from 17.9 percent in August. However, it failed to sustain this downward trend after it deepened again to 12.8 percent in October.

Likewise, the PMI showed erratic readings in August (47.3), September (50.1) and October (48.4). A PMI above 50 represents an expansion when compared with the previous month.

“As long as lockdowns are in place, there will be hesitation on the part of consumers and investors to behave like they did before March,” Beltran said in his report submitted to Finance Secretary Carlos G. Dominguez III.

Beltran, however, clarified that the local economy is on its way to recovery.

Merchandise trade has slowed from a 59.5 percent decline in April, reflecting economic recovery as the country eased lockdown measures.

Exports followed the same trend, Beltran said, noting it bottomed at 49.9 percent decline in April but improved to 2.2 percent decline in October.

“So did imports, bottoming at -65.3 percent in April but rising to -19.5 percent,” Beltran said.

The recovery in trade is also seen in the improvement in the PMI of recent months from the low of 31.6 in April, he added.

“Good macroeconomic fundamentals have cushioned the impact of the coronavirus pandemic,” Beltran said.

“With a vaccine in sight, continuing the prudent, calibrated reopening of key sectors of the economy will be key to the recovery of the economy in general and trade in particular,” he added.

Looking ahead, the finance official said the Philippines should continue to adopt economic reforms, in addition to its infrastructure program, to attract more investments.

“The recent passing of CREATE and FIST in the Senate are welcome and will help in decreasing the burden on businesses, once signed into law,” Beltran said.

“Reforms such as PIFITA (Passive Income and Financial Intermediary Taxation Act] as well as amendments to the Commonwealth-era Public Service Act and the Retail Trade Liberalization Act, can also help the country weather and recover from the impacts of the coronavirus pandemic,” he added.

Beltran added the government should also improve the ease of doing business in adapting to the so-called new normal.