Economic recovery hinges on management of health risks — DOF

MANILA, Philippines — With no vaccine yet to contain the coronavirus pandemic, the country’s economic recovery would have to depend on its ability to manage risks posed by the virus, the Department of Finance (DOF) said yesterday.

In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the enforcement of quarantine restrictions and physical distancing protocols to control the spread of the coronavirus disease 2019 or COVID-19 has “inevitably” caused collateral damage to the economy.

Such damage plunged the country into a recession in the second quarter of the year, with the gross domestic product contracting by 16.5 percent. In the first half of 2020, GDP declined at an average of nine percent.

Nevertheless, Beltran said restrictive measures are necessary as they serve as a “hedge against further complications.”

“Calibrated quarantines could be ramped up or down, as the situation may call for, as demonstrated by the recent tightening of quarantine rules in the NCR and adjacent provinces,” he said.

As such, Beltran said economic recovery would be up to the country’s capacity to manage the health risks posed by the virus.

“Such capacity could tilt the odds in what is apparently a life-versus-livelihood dilemma and make it more of a life-and-livelihood dual outcome, but probably at a lesser scale than before under a ‘new normal’ should there still be uncertainties about and risks posed by the virus,” the DOF’s chief economist said.

Beltran noted that the fiscal sector will continue playing an active role in maintaining economic stability amid the pandemic and reviving growth once the virus is defeated.

He said the proposed Corporate Recovery and Tax Incentives for Enterprises bill (CREATE) would help provide support in reviving the economy not only in the first year of its implementation, but also in the long run.

For 2020, the Development Budget Coordination Committee (DBCC) sees GDP contracting by 5.5 percent, worse than the previous estimate of two to 3.4 percent.

Still, economic managers expressed confidence that the economy would be able to rebound in 2021, with the GDP seen growing by 6.5 percent to 7.5 percent.

Earlier, Finance Secretary Carlos Dominguez also said that Filipinos would need to learn to “live with the virus” to help the economy recover from the impact of the pandemic.

“A lot of our recovery will depend on our ability to either live with this virus or to conquer it. Of course the latter is better. But that is not in the immediate horizon. Probably it is very important for us to learn how to live with it,” he said.