Prior to COVID-19 outbreak, the Philippines was one of Southeast Asia's most dynamic economies. Strong consumer consumption, a vibrant labor force, and remittances from abroad are all important factors in the Philippines economic development. These are aided by increased industrialization, a growing middle class, and a young population. The Philippine economy has made significant progress in achieving inclusive growth over recent years. Poverty has dropped from 23.3 % down 16.6% in 2016. COVID-19 Pandemic, on the other hand, has reversed this growing trend in wage growth, having severe repercussions for the Philippines' poverty reduction efforts. Resuming growth could help to reverse this declining trend by taking actions on it especially to our government leaders.
The country's first COVID-19 case was reported in January 2020, and by March 2020 the country had already been placed under a strict community lockdown, whereas travel and business activity was strictly limited. Whereas these actions helped to control the spread of COVID-19, individuals also had serious implications for average earnings, employment, education, food security, and enterprises.
In the second quarter of 2020, the Gross Domestic Product (GDP) growth rate dropped to 16.5%, the lowest quarterly growth rate since 1981. Manufacturing (-21.3%), Construction (-33.5%), and Transportation and Storage (-59.2%) were the largest contributors to the reduction. Whereas, these are the three major points on how COVID-19 Pandemic ruined the country’s economy.
To begin with, since the first quarterly report in 1981, we've never encountered a GDP decline this substantial. This downfall even transcends the low point of the previous greatest post war recession, which occurred under the previous administration. From 1983 to 1985, the Philippines had 9 consecutive quarters of economic contraction but nothing like 16.5 % in a single quarter. Indeed, you might argue that we have not yet encountered the massive collapse since World War ll.
Second, the recession breaks nearly three decades of uninterrupted economic growth. A recession occurs when an economy contracts for two quarters in a row. Because our economy dropped by 0.7 % in the first quarter, we're definitely in one. The last time we had an economic downturn was in 1991, when the economy was hammered by a series of natural disasters, a power outage, and political instability. However, when time passes, history shows that it takes a lot to bring our economy into the ground. The Philippine economy has never entered a recession, even during previous global crises such as the Asian financial crisis and the more recent global financial crisis. For decades, our economy had shown to be quite flexible when COVID-19 outbreak arrived. Finally, our economy has met its match.
Lastly, our second-quarter performance was likewise weak in comparison to our ASEAN counterparts. Presidential spokesman, Harry Roque, tried to minimize the matter by noting that we've been "not the only country suffering this problem." COVID-19 Pandemic had a negative impact on the economy on nations such as Singapore, Indonesia, U.S., France, Spain, and Mexico." However, it illustrates that we have been affected the hardest among our neighbors so far. Vietnam, for example, increased by 0.4 % in the second quarter despite being one of the countries that responded the fastest and most effectively to the outbreak.
The government is planning an additional fiscal support package to be implemented, which is expected to include cash subsidies to low-income households, support for jobseekers and critical industries like agricultural production, tourist industry, public transit, and relief for the healthcare system, and among other things. These types of policies will have a large compounding impact and keep the economy on pace to improve after this year. The forecasts are within the goal range of the Philippine central bank, which is 2.0 % to 4.0 % , implying that monetary policy would continue to aid the economy's recovery from the pandemic.
For instance, the Philippines economy will take a long time to recover, and the effects on businesses and livelihoods will last for a long time. Jobs will be limited, with certain industries, such as tourism and retailing, being hit more than the others.
REFERENCES:
PSA. 2020, August 06. GDP growth rate drops by 16.5 percent in the second quarter of 2020; the lowest starting 1981 series. Retrieved from: https://psa.gov.ph/foreign-investments/technical-notes
FutureLearn. 2021, August 18. The Philippines Economy and the Impact of COVID-19. Retrieved from: https://www.futurelearn.com/info/futurelearn-international/philippines-economy-covid-19
Punongbayan JC. 2020, August 07.[ANALYSIS] End of growth: How the pandemic ruined PH economy beyond recognition. Retrieved from: https://www.rappler.com/voices/thought-leaders/analysis-end-growth-how-pandemic-ruined-philippine-economy
Disclaimer (Photos not mine)
https://www.rappler.com/tachyon/2020/08/tl-covid-and-duterte.jpg?resize=644%2C362&crop_strategy=smart&zoom=1
https://psa.gov.ph/sites/default/files/kmcd/NAP%20Q2%202020%20Graph_fnsdlfi32813.png
https://www.rappler.com/voices/thought-leaders/analysis-end-growth-how-pandemic-ruined-philippine-economy
Comments