Finance Secretary Carlos Dominguez III said Tuesday the economy likely improved in the fourth quarter of 2020 following the easing of quarantine restrictions.
Dominguez said in an online event organized by the Management Association of the Philippines the restrictions in the second quarter of 2020 caused the gross domestic product to decline 16.9 percent and the unemployment rate to reach 17.7 percent.
He added the strict community quarantine measures cost the National Capital Region and its adjacent provinces some P2.1 billion in lost wages every day.
“We expect to see additional improvements in the last quarter of 2020 as we have been progressively reopening businesses and accessibility to mass transportation,” Dominguez said.
The GDP contracted by a slower 11.5 percent in the third quarter. On a quarter-on-quarter basis, the economy actually grew by 8 percent, while unemployment rate eased to 8.7 percent.
“Nevertheless, we were still losing P700 million in wages each day in the NCR and nearby provinces due to the general community quarantine,” Dominguez said.
He said the depth of the pandemic’s economic impact should be matched with bold initiatives on the part of enterprises and the government. “We need to reinvent ourselves in order to recover. Be assured that we will continue to consult and engage with you as we move to boldly reopen the economy as safely as we can,” he said.
The government’s direct response to the pandemic amounted to P2.66 trillion or 14.7 percent of GDP, including the largest social protection program in history that provided emergency cash grants to low-income families and wage subsidies to workers in small businesses, he said.
Dominguez urged banks to share the incentives granted to them by providing more loans to home buyers at lower rates. He said this should help create jobs in the construction sector.
“Understandably, we expected our revenue collections last year to be lower than projected due to the slowdown of economic activity. Nonetheless, our solid financial footing allowed us to afford a responsible level of deficit spending to cover our COVID-19 response, while continuing to implement the priority programs under the 2020 national budget,” he said.
Dominguez said that despite the challenging circumstances, the government managed to collect revenues amounting to P2.8 trillion in 2020, or just four tenths of one percent short of the total collection outlook for the year. He said, however, this was 9 percent below the 2019 level and 19 short of the original target before the crisis struck.
He said that this year, the Philippines would maintain an elevated but manageable deficit program of 8.9 percent behind the need for strong government fiscal support in restarting the economy.
“We expect the national government’s debt to settle at 57 percent of GDP this year. Even with the upscaling of our borrowing plan, we will still be able to keep our debt ratio within a sustainable threshold. This gives us the advantage over economies who were already saddled with heavy debt prior to the crisis,” he said.