PH  in 2021 – from recession to recovery

Published January 14, 2021, 12:58 AM

by Manila Bulletin

The Philippines  fell into recession in 2020, like many other nations in the world, as the COVID-19 pandemic stopped virtually all economic activity. The  country’s Gross Domestic Product (GDP) fell by 16.5 percent in the second quarter of April-May-June from the previous year, the biggest slump since  GDP recording started in 1981.

Manufacturing was down by 21 percent; construction, down by 33.5  percent; transportation and storage, down  by 59.2 percent; industry and services, down by 22.9 percent;  services, down  by 15.8 percent; household expenditures,  down by 15.5 percent; exports and imports, down by 37 and 40 percent, respectively.   Among the major economic sectors, only agriculture, forestry, and fishing recorded growth and  this  was  by only 1.6 percent.

That was at the height –rather the depth – of the country’s recession in the middle of 2020.

This week, the  Philippine  economy  was  reported  recovering  from its recession. Finance Secretary Carlos  Dominguez  III  cited the swift enactment of two administration measures—Bayanihan 1 and 2 – which beefed up healthcare infrastructure and, at the same time, extended emergency subsidies to  dislocated workers and provided relief to businesses. The Bangko Sentral ng Pilipinas (BSP) responded to the crisis with  measures  to  buoy  market confidence and  ensure sufficient liquidity and efficient functioning of the financial system, said BSP Governor  Benjamin Diokno.

The Philippine economy is now expected to swing from the recession of 2020 to growth of 6.5 to 7.5 percent in the new  year 2021 – to 8 to10 percent next year 2022. Growth  will  be  supported  by  government spending under the just-approved National  Budget of P4.506 trillion – 10 percent higher than the previous year’s budget.

The  Philippines  has  maintained its  standing in   the international financial community, with   Fitch Ratings maintaining its “BBB” credit rating  for the country. Fitch has downgraded its ratings  for  many countries  in the midst of the pandemic, including Mexico, Italy, and Colombia, which used to have the same rating as the Philippines but  have now been downgraded to “BBB.”

Fitch also expects the  Philippines to achieve economic recovery this year, projecting its growth at 6.9 percent in 2021 and at 8 to 10 percent in 2022.

The world, including the Philippines, continues to be threatened by the COVID-19 virus, but the  Philippines  is doing  relatively well in keeping its cases down. As  for  the COVID’s economic impact, we  have great confidence  in our country’s recovery, as  shown in the  reports of the Department of Finance and  the Bangko Sentral and the highly positive assessment of Fitch Ratings.