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Philippines: Former NEDA chief sees 8.5% GDP plunge
The Philippine economy will likely contract by more than 8 percent this year and is expected to start to recover in the latter part of 2022 at the earliest, a former Cabinet official said on Monday.
During the Pilipinas Conference 2020, former National Economic and Development Authority (NEDA) secretary Ernesto Pernia said he expects the country’s gross domestic product (GDP) to decline by 5.0 percent in the fourth quarter and contract by 8.5 percent for the whole year.
“This is more or less in the ballpark of the projection of other experts/organizations,” said Pernia.
“So it is not likely that we will be going back to pre-Covid (coronavirus disease 2019) situation in 2021. At the earliest, perhaps in the second half of 2022 we can probably begin to recover in terms of getting back where we were before,” Pernia added.
He also criticized the government’s low spending for its pandemic response.
”We have the sorry reputation of having the highest Covid caseload in this part of Asia vis-a-vis population despite the world’s longest continuous lockdown. The economy is seen as the slowest to recover among Asean (Association of Southeast Asian Nations) countries,” Pernia said.
He noted that among the Asean countries, the Philippines also has the weakest health system capacity.
“That’s because of severe underspending in health capacity in the past,” said Pernia.
On government spending for the Covid-19 response, Pernia said the Philippines has a “very low ratio” considering the country has a very large population.
”And we have the highest inequality and poverty in Asean. So, that’s why I think it’s not a good thing to be conservative in Covid spending. The government has been rather stingy in spending for Covid response, which has impacted our health system capacity as well,” he said.
“The Philippines is spending the least among Asean countries at $21.65 billion,” Pernia added.
This he said is lower than Indonesia’s $115.78 billion; Malaysia’s $80.78 billion; Singapore’s $89.14 billion; Thailand’s $84.09 billion; and Vietnam’s $26.50 billion.
“Whereas the other countries had big spending at the start of the pandemic to stave off negative impacts on health and economy, we have been spending little by little. And the reason for that I think is we are trying to preserve our credit rating,” he said.
“We’ve been trumpeting that the Philippines has a high credit rating but we are just middling. What is really a source of wonder is Singapore, which has a high GDP-to-debt ratio, also Malaysia they are hitting ‘AAA’ or ‘-A.’ So what is the worry about being downgraded if we spend more? There really is nothing to crow about regarding our credit rating. And credit rating means you are creditworthy and can borrow more at reasonable interest rates,” he added.
Pernia noted that the Philippines is where it is now because it failed to “sow enough.”
“There has to be greatly increased spending, maybe taking from the infra budget to fortify health system capacity,” he added.
Source: https://www.manilatimes.net/2020/11/24/business/business-top/former-neda-chief-sees-8-5-gdp-plunge/800859/