GOVERNMENT officials are confident that the Philippines will recover before the year ends from the economic fallout from the coronavirus disease (Covid-19) pandemic.
But while acting Socioeconomic Planning Secretary Karl Kendrick Chua sees a V-shaped recovery that would probably start in June, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno maintained his forecast of a gradual U-shaped recovery that would start in the fourth quarter of this year yet..
Philippine gross domestic product (GDP), or the sum of goods and services produced in the country, slid into negative territory as it contracted by 0.2 percent in the first quarter of 2020 due to the Covid-19 pandemic.
Chua, in an online press conference Thursday morning, May 7, said growth figures would be “very bad” in April but this trajectory might start to reverse by June as the government ramps up testing for the novel coronavirus, or Sars-CoV-2, that causes Covid-19.
Chua said he sees full recovery by the second half of this year so that the Philippines would likely end 2020 with a “respectable performance”
“We are hoping that with the 30,000 tests per day by the end of May, we can start to reverse the economic trajectory by June so that by the second half of the year, we can fully recover,” Chua said.
The inter-agency Development Budget Coordination Committee, which sets the macroeconomic assumptions and growth targets of the government for budget purposes, had forecast a full-year GDP growth of -0.1 percent to zero for 2020.
The DBCC set a target of 6.0 percent to 6.5 percent in December 2019 for the 2020 GDP growth.
Diokno, in a separate online briefing on Thursday, said the first-quarter GDP results were disappointing, but “there’s hope that we may not end up in a recession this year.”
“I was looking at the numbers last year and it turned out that the slowest quarter for the entire year was the second quarter,” Diokno said.
“So there’s hope that we will not sink too much in the second quarter, although we are forecasting a contraction in the second quarter, and probably in the third quarter, that’s why we’re talking of a U-shaped recovery. But we are expecting a strong bounce-back in the fourth quarter,” he added.
A recession is marked by a fall in GDP for at least two consecutive quarters.
The central bank earlier said it had undertaken extraordinary measures to mitigate the economic fallout from the pandemic.
Read: BSP bares ‘extraordinary’ steps as part of P1.17-T package
Among these measures was the cumulative 75-basis-point reduction in the monetary policy rate since February 2020 and the 200-basis-point decrease in the reserve requirement ratios of universal and commercial banks as well as non-bank financial institutions with quasi-banking functions.
The central bank has also been purchasing government securities, including peso-denominated issuances in a bid to assure market players of demand.
Diokno earlier said these measures are aimed at shoring up market confidence, ensuring liquidity for the proper functioning of the financial market and preventing serious repercussions on the economy over the medium term.
The Philippine economy has been growing by at least 6.0 percent since 2012. It has been slowing down, however, in the past couple of years.
In 2019, GDP grew by only 5.9 percent, the first sub-6.0 percent growth since 2011.
With the Covid-19 pandemic, growth is expected to be flat at best. The pandemic has caused the Philippines and other economies worldwide to shut down.
Tourism ground to a halt, trade was diminished, economic activities have been brought almost to a standstill, supply chains were disrupted and overseas Filipino workers remittances fell as more than 20,000 migrant workers were displaced.
Government hopes to restart the economy after ramping up its test capacity to be able to detect those who are infected, isolate and treat them.
The target is to increase diagnostic tests to 30,000 per day by the end of May from the current 5,000 average tests conducted per day by the 22 accredited testing laboratories nationwide.
Nearly 60 other laboratories are undergoing accreditation process and are expected to start operations before the end of this month.
As of May 7, the novel coronavirus has infected 10,343 people in the Philippines, including 685 who had died and 1,618 who have recovered.
Worldwide, the virus has infected more than 3.58 million people and killed over 200,000 people. (MVI/SunStar Philippines)