Philippine economy still far from pre-pandemic levels —PSA data

While the Philippines graduated from recession in the second quarter of 2021 after five straight quarters in the negative territory, the economy still has a long way to go before going back to pre-COVID-19 pandemic levels, according to data from the Philippine Statistics Authority.

The country’s gross domestic product (GDP) grew 11.8% in the April to June 2021 period, its highest quarterly reading in 32 years owed largely to “low base effect” since the comparable period in 2020 was at -16.9%.

Second quarter 2020 was a period when most of the economy was shut down due to the imposition of enhanced community quarantine (ECQ) to arrest the spread of COVID-19.

For Socioeconomic Planning Secretary Karl Kendrick Chua, the robust performance in the second quarter of the year is “driven by more than just base effects” as it resulted from a “better balance between addressing COVID-19 and the need to restore jobs and incomes of the people.”

Chua noted that the ECQ in late March to mid-April this year is more relaxed compared to last year’s hard lockdown thus the economy had more room to grow despite being under community quarantine.

“We are cognizant of the fact that our ECQ is more managed unlike last year… we shutdown public transport,” he said.

Metro Manila was placed under the strictest enhanced community quarantine (ECQ) from March 29 to April 11, followed by the modified ECQ (MECQ) from April 12 to May 14.

This was followed by a GCQ for most of June and July, followed by the ongoing ECQ set to last until August 20, 2021.

While the exit from the pandemic-induced recession is a welcome development, the Philippine economy is still far from reaching the growth levels in 2019 —before the COVID-19 crisis.

“The first half GDP at constant prices is estimated at P8.9 trillion, this is higher by 3.7% versus the first half of 2020 estimated at about P8.6 trillion,” National Statistician Claire Dennis Mapa said.

“Pre-pandemic, 2019, the first half of 2019 at constant prices is P9.4 trillion, and the P8.9 trillion first half of 2021 is lower by 6% compared to first half of 2019,” he added.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the economy is still lower compared to before the pandemic.

“The economy could go back to pre-COVID levels by late 2022 (in time for the election year) or by early 2023,” Ricafort said.

In a separate commentary, London-based think tank Capital Economics said that the economy shrank by 1.3% quarter-on-year.

“That leaves GDP around 9% below its pre-crisis level and a whopping 17% behind its pre-crisis trend,” it said.

Hitting targets

With the economic managers targeting a 6% to 7% growth, the Philippine economy will have to expand by at least 8% in the succeeding quarters for this to be met.

The last time the Philippines recorded growth of 8% was in the first and second quarter of 2010, which was an election year.

“The outcome will depend on how fast we address the present spike and how fast we vaccinate people, because the more we vaccinate, the more we can safely reopen the economy,” said Chua.

Mapa said to hit the lower end of the target for 2021 at 6%, the second half of 2021 GDP should grow by 8.2%.

“On the other hand, if we want to get 7.0%, the economy should grow by 10.2% during the second half,” Mapa said.

Nonetheless, Chua said the economic managers are constantly reviewing the numbers on the economic and health sides.

“The second quarter results are going to help us achieve our target for the year. However, it also depends on the outcome of this present ECQ,” the Cabinet official said.

“If we are able to manage the risks and everyone cooperates and adheres to protocol then we will be able to lift the ECQ sooner. On the other hand, if we do not comply then it is possible the ECQ will be longer,” he said.

“We will maximize this period to inoculate as many as we can so that we can pave the way for the safe reopening of the economy and minimize the risks in the second half of 2021,” he added.—AOL, GMA News