Intensified spending to help expedite economic recovery

CEBU, Philippines —  Granting that the government fulfills its promise to pour in more spending amid the pandemic, the Philippines is poised for a recovery of 6.6 percent in 2021.

BDO chief Investment Officer (CIO) Frederico “Fritz” Ocampo made this projection despite the fact that economic growth and activity have slowed down as a result of the persisting COVID-19 pandemic.

In a recently held webinar dubbed “Market Sense,” a monthly online forum series organized by the BDO Trust Group, Ocampo said the bank is looking at a gross domestic product (GDP) contraction of 9.6 percent in the 3rd quarter, and a 6 percent contraction in the 4th quarter to bring its full year 2020 GDP projection to negative 8.3 percent.

The government’s aggressive spending would allow the economy to recover, “and that would be the 2021 story.”

We're facing a recession, which could be the deepest in 35 years. Therefore, the growth drivers were hurt a bit, especially consumer demand, which is 72 percent of the economy, as well as investments from large local corporates and SMEs. But as the economy slowly opens up once again, you'll see those drivers bouncing back,” he added.

  The economist also expressed belief that the Philippines can stand out once again in the global stage, anchored on the country’s young population.

“The Philippines had 21 consecutive years of economic expansion, surpassed only by Australia. That is a testament to the resiliency and strength of the Philippine economy. While the growth drivers were hurt during the pandemic, the strengths of the Philippine economy remained intact. For instance, our young population is still there,” Ocampo stressed.

“In a pandemic, you could see the value of that young population in terms of adaptability to the digital economy, in terms of proficiency in the use of the internet. Later on, these young population, many of them would be creating their own companies and become entrepreneurs. Many jobs were lost during this pandemic. To cope, our young population would be creating their own companies,” he further explained.

In the same webinar, economist and Marikina (2nd District) Rep. Stella Luz Quimbo, the government needs to spend even in the midst of a crisis in order to boost confidence levels of the public, especially businesses.

  “In a bad economic crisis, confidence level is very low—confidence of consumers, confidence of your workers. Everyone's afraid. Fear and anxiety have set in. Even business owners, they don't want to invest. In fact, they'd rather close shop. So this is a situation where government must step in. If the government is not spending enough, then our confidence will be deflated," added Quimbo.