The National Economic and Development Authority said Thursday the economy will likely return to pre-pandemic level by the end of 2022 or early 2023, after the economy grew 11.8 percent in the second quarter, despite the quarantine restrictions and the lingering impact of the pandemic.
Economic Planning Secretary and NEDA director-general Karl Kendrick Chua said during the budget hearing at the House of Representatives that the prospects for 2021 remained encouraging and “will allow us to recover to pre-pandemic levels sometime at the end of 2022, if not early 2023.”
The Development Budget and Coordination Committee met last week and revised the country’s growth targets for 2021 to a range of 4 percent to 5 percent, down by 2 percentage points from the original goals.
“Next year will be 7 percent to 9 percent before moderating to our long-term growth of around 6 percent to 7 percent. The enablers of our recovery hinge on acceleration of the vaccination program, the continued safe reopening of the economy while adhering to the health protocols and the full implementation of our recovery package, which includes the present 2021 budget, the CREATE law, and the FIST law,” Chua said, referring to the Corporate Recovery and Tax Incentives for Enterprises Act and Financial Institutions Strategic Transfer Act.
Chua said the COVID-19 vaccination program was on track, with 48.5 million doses arriving in the country and 31.1 million already administered as of Aug. 22.
NEDA also cited the importance of the safe reopening of the economy and the need to balance both the COVID-19 risk and the non COVID-19 risk, which includes the people’s other sickness, their need for income to address joblessness and also hunger.
“The imposition of the MECQ in high-risk areas, including NCR at this time of the year is our proactive response to balancing the needs of the people and addressing the spread of the more contagious Delta variant. The present status of the economy and employment as of the week of Aug. 21 to the end of August is that 54 percent of the economy is currently under MECQ,” Chua said.
He said while there are no more areas under ECQ at this point, several areas remain under MECQ. Fifteen percent of the economy are in GCQ with heightened restriction while the rest are in GCQ or MGCQ, he said.
“In terms of the number of workers affected, even under the MECQ, our estimate is that around 15.647 million workers are affected by the MECQ. And we will continue to work to enhance the implementation or enforcement of the minimum health standards to allow us to reduce the risks of the Delta variant to allow us to further reopen the economy at the appropriate time,” he said.
He said impact of the ECQs on the economy was staggering. “When we had the ECQ last week in the NCR+ area, the impact of the economy was estimated at P144 billion per week; 161,000 to 242,000 more poor people, and 607,000 estimated to be unemployed,” he said.
Chua said as the government balanced the situation better right now, under the MECQ, “we are able to reduce the impact on the economy by half to around P73 billion per week, the number of poor people down to 82 to 123,000, and the number of workers that may be affected to 310,000.”
“So in other words, our imposition of quarantine does not come without costs. There are severe economic costs and that is why our position to manage this risk so that we can see if we open the economy at the appropriate time,” he said.