Malacañang remains optimistic that the Philippines can soon recover after it officially entered a recession with a 16.5 percent economic plunge in the second quarter due to COVID-19-related lockdowns.
READ: Recession as GDP nosedives
Presidential spokesman Harry Roque said that while a contraction in the country’s gross domestic product (GDP) is expected, he was concerned that the drop is “much worse” than what the government’s economists predicted.
Despite this, Roque said, economic managers have put together an economic recovery program dubbed as “PH-Progreso” or the “Philippine Program for Recovery with Equity and Solidarity”, to save the economy from collapsing.
He said the government has also recalibrated the budget for 2021 and restarted the Build, Build, Build infrastructure programs, subject to health and safety protocols, to create jobs.
“Our resolve to recover at the soonest possible, however, remains strong. Protect life for livelihood is our battle cry,” he said in a statement on Thursday.
Roque said the public should also take into consideration that the Philippines is not the only nation facing an economic crisis.
“COVID-19 has had an adverse economic impact on countries like Singapore, Indonesia, the United States, France, Spain, Mexico,” he said.
He recognized the hardships of Filipinos, especially low-income families, noting that the government provided an emergency subsidy program after it decided to impose lockdowns across the country.
READ: Market rallies, ignores economic plunge in Q2
Citing the Philippine Statistics Authority (PSA), Roque said the main contributors in the decline were the decline in manufacturing, construction, and transportation and storage sectors that were greatly affected by the lockdowns.
He also said the Palace expects an improvement in the performance of these sectors during the second semester of the year, with gradual reopening of the economy and the proposed Bayanihan to Recover As One or Bayanihan 2.
In a separate statement, Presidential Communications Operations Office (PCOO) Secretary Martin Andanar said that despite the economic slump, the country is in a “much stronger” position to address recession in the long term.
Andanar said the government will continue to strike a balance between supporting the economy while ensuring everyone’s protection, especially that of the country’s health care workers.
“We firmly believe that we will heal and rise again,” he said.
Manuel V. Pangilinan, chairman, president and chief executive of PLDT on Thursday said the contraction of the country’s economic output in the second quarter was cause for concern, as it could affect people’s disposable income.
“The 16.5 percent contraction is worrisome,” Panglinan said, adding that the ability of the people to spend on the telco products may be affected in the third and fourth quarter of the year.
“This is a worrisome issue for us because it could very well affect our revenues moving forward. But part of our job for the balance of the year is to contain our costs because that’s within our control, but revenues we are uncertain of,” he added.
PLDT reported a net income of P12.42 billion in the first half of the year, up by only 1 percent from P12.23 billion in the same period last year. Its total service revenues reached P82.8 billion in the first half of the year, higher by 8 percent compared to the same period last year.
Pangilinan said he is also worried about the health of the company’s workers and the public in general.
The Management Association of the Philippines, the Philippine Chamber of Commerce and Industry (PCCI) and the Federation of Filipino Chinese Chambers of Commerce and Industry, Inc. (FFCCCII) said consumer and government spending would help fuel a recovery.
“A stimulus package like the ARISE that was endorsed by more than 40 local and foreign business groups, supported by five Cabinet secretaries and approved by more than 90 percent of the House membership is really needed for the economy to bounce back at the soonest possible time. We have been saving for the rainy days and now is the time to spend,” said MAP president Francis Lim.
He proposed for ARISE to be implemented on a staggered basis and partly supported by borrowings.
PCCI, on the other hand, expressed grave concerns for the micro, small and medium enterprises (MSMEs) businesses that populated its membership.
READ: Duterte OKs 2021 recovery budget
“In our situation, with the lockdown, more MSMEs will close, We hope this will be temporary only…. Big company operations are also seriously affected. They are forced by the circumstances to limit [their] workforce. There are very few companies like San Miguel Corporation that insist on maintaining their workforce under this most difficult time,” said PCCI chairman emeritus Francis Chua.
The FFCCCII, meanwhile, urged banks and the government “tohelp unleash liquidity to fuel the engine of economic recovery.”
“Banks need not be overly conservative. If more money circulates, the faster momentum of economic recovery shall benefit all in a virtuous cycle of investments and consumption, in contrast to a climate of fear and gloom with its vicious cycle of shutdowns or retreats. We urge banks to extend support to MSMEs, many of which now face existential threats and also to big companies which want to consolidate and expand,” said FFCCCII president Henry Lim.
He encouraged fellow business people to prioritize employment by cutting costs and inefficiencies.
“In fact, let this crisis be a time to seek out unique opportunities to go into new business ventures or even to boldly expand, so that we can create more jobs for the Philippines,” he added.
He also called for a stable and affordable supply of basic commodities, especially food and medical supplies.
Senator Panfilo Lacson said the government must walk the tightrope between health and economic issues.
On the other hand, he said he wanted to believe that strong economic fundamentals would pull the country through the crisis.
Earlier, Senate President Pro Tempore Ralph Recto, Senator Juan Edgardo Angara and Senate Minority Leader Frank Drilon said they were no longer surprised when the Philippines fell into a recession.
“I expected it. It will be hard for people to get back to work unless the government can prove that it can beat the virus,” said Recto.
So far, he said the people, consumers, workers and investors think the government is losing the battle.
On the other hand, Angara noted that economies of the world are in recession.
“What is important is the recovery strategy which a country pursues,” he said.
He said Bayanihan 2 will help initially but it should be followed by other economic actions.
Drilon said the worse-than-expected pandemic-induced recession should be an eye-opener for the Inter-Agency Task Force and the country’s economic managers as he underscored the need to revive the demand side of the economy by restoring the people’s confidence in the ability of the government to handle the COVID-19 pandemic.
“Nobody expected it to be this severe. This is the result of the ‘shotgun’ approach in handling COVID-19. This shows the grim reality: the people are hungry, no jobs, no money and no more savings,” Drilon said.
He said the 16.5 percent decline in the country’s GDP is worse than what the government expected it to be, citing Bangko Sentral ng Pilipinas Governor Benjamin Diokno’s projection of around 5.7 to 6.7 percent decline in the second quarter.
Drilon said this means the Philippines is now in recession following two consecutive declines in the gross domestic product (GDP).
The minority leader said that “the government must take swift and decisive actions” within the remaining months of the year to help the poor and revive the demand side of the economy, noting how household consumption in Q2 declined by 15.5 percent.