GDP: Gutom Dito Pilipinas

Call them doomsayers but our state economic statisticians are no magicians to do tricks nor are they artists to paint a rosy picture for the Philippine economy. Actually, no less than the economic managers of President Rodrigo Duterte have been up-front and forthright in dishing out the true state of the country’s economy in the aftermath of the coronavirus disease 2019 (COVID-19) pandemic that first struck us in January a year ago.

The youngest among the economic managers of President Duterte, National Economic and Development Authority (NEDA) “acting” Secretary Karl Kendric Chua was the first to sound the alarm on the state of health of our country’s economy. It was during our weekly virtual Kapihan sa Manila Bay news forum last Dec. 16 when Chua described the Philippines as having “the longest, broadest and deepest” quarantine measures since the COVID-19 pandemic struck.

But Chua hastened to cite that the strong macro-economic fundamentals, however, have cushioned the Philippine economy from its impact. Chua credited these to structural and fiscal reforms implemented for the past three years under the Duterte administration.

True to his calling, the young Duterte technocrat reported the same prognosis and forecast when he rendered last week the NEDA report. Chua presented the annualized data and statistics of the 2019 economic performance of the Philippines as principally measured by the country’s gross domestic product (GDP). All of these data were culled from the Philippine Statistics Authority (PSA), an attached agency under the NEDA. In a virtual press conference last Thursday, Chua reported the country’s economy contracted by an average of -9.5% for the entire year of 2020.

In a joint briefing to media with Chua, national statistician and PSA chief Dennis Mapa noted this was a record low ever and sharpest dive of the Philippine economic growth since government GDP data began in 1946. On record, the first GDP contraction was -7% posted in 1984. During the fourth quarter of last year, the GDP decline slowed down to -8.3% from -11.4% in the third quarter.

This reflected the effects to the economy after restrictions were gradually eased and buoyed by the seasonal demand kicked in by spending for the Christmas holidays. Thus, on a quarter-on-quarter basis, the economy grew by +5.6% in the fourth quarter of 2020. “This improvement was the result of the further reopening of businesses and wider accessibility of public transport since October 2020,” Chua cited. However, it still paled in comparison to +6.7% growth in the fourth quarter of 2019.

In the virtual news conference before the Foreign Correspondents Association of the Philippines (FOCAP) the next day, Chua spoke to them with the same candor: “To be honest, this year will be a slow start and we will ramp up by the middle of the year starting in the second quarter.” To achieve this target, the Duterte administration must embark on a huge and much bigger catch up for the rest of the year. This is something Chua candidly admitted would be easier said than done.

Chua pointed as the biggest hurdle for the country’s GDP to recover are the continuing community quarantine restrictions which he blamed for choking down “the busiest area of the economy.” Malacañang announced on Friday that President Duterte approved the recommendations of the Inter-Agency Task Force for the Management of Emerging and Infectious Diseases (IATF-MEID) to retain the general community quarantine (GCQ) in Metro Manila, the Cordillera Autonomous Region, and six other parts of the country until the end of February.

It was several steps back from the rosy projection of 6.5% to 7.5% GDP growth for this year that Chua earlier predicted a month ago. Perhaps, this is indicative of the sentiments of President Duterte’s economic team composed of, namely, Finance Sec. Carlos Dominguez; Department of Trade and Industry (DTI) Sec. Ramon Lopez; Agriculture Sec. William Dar; Department of Budget and Management Sec. Wendel Avisado; and Chua. They are all members, too, of the IATF.

The economic team, in fact, endorsed and subsequently adopted much earlier last week by the IATF to relax the stay-at-home age restrictions of ten-year old children up to 65 years old people. However, this was shot down by President Duterte after local transmissions of the more infectious COVID-19 variant from United Kingdom (UK) were detected here.

DTI Sec. Lopez echoed the concerns of the NEDA chief on the heavy toll to the economic well-being largely traced to lessened mobility of people and goods in and out of the country. Lopez cited NEDA statistics, Metro Manila loses as much as P700 million in un-generated wages every day the national capital region remains under GCQ. This is not to mention the rising jobless rate and shutdowns of even biggest companies to closures of small business enterprises due to COVID impact.

As this developed, Bangko Sentral ng Pilipinas (BSP) on Friday released their latest month’s inflation rate projection to likely hit 3.7% this January, or settling within a range of 3.3% to 4.1%. It would be higher and faster than the 3.5% inflation seen in December, which was already a 22-month high. The biggest inflation push come from high prices of food such as vegetable and meat products.

Unlike the GDP, the sum total of the country’s economic performance is measured as gross national product (GNP), that include exports minus imports annually. Reacting to the economic performance report of NEDA, Senate president tempore Ralph Recto, dubbed as the resident economist at the Senate, punned a new meaning of the GNP. Amid the rising prices of basic goods while the income of the people coming from wages, salaries and livelihood earnings shrink, Recto rued: “If the GDP report card is bad, the GNP – the number of Gutom Na Pilipino (Filipinos are hungry.) – is worse.”

My own take away, the country’s GDP might turn into “Gutom Dito Pilipinas.”

With less than two years left of the Duterte administration, it would be a bad legacy for the President to leave the GDP at its worse.