·IMPACT OF COVID-19 PANDEMIC ON THE PHIIPPINE E ~

On May 2?21., ~r. Ben 0 . de Vera with a report from Leila B.,Salav . .
of th e Philippine Dally Inquirer published the following article , erna

"PH ECONOMY SINKS DEEP-ER INTO RECESSION"

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T~e- P~lippine economy is now in its longest recession since the foreign debt
cns1s 1n the 1980s after it shrank further in the first three months of 2021.

The pandemic-induced economic downturn has extended to five ' consecutive

quarters the Philippines remained under the longest and most stringent
C9VID-19 quarantine in Asia due to elevated virus infections~ · ·
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National statistician Denis Mapa told a·press. briefing on May 11 that the 2021
gross domestic produ~t (GDP) in ·the first quartet of 2021 declined by 4.2 perc.ent
from a year ago, better than the 8.3-percent drop in the fourth.quarter of 2020 but
worse compared to the 0.7-percerit contraction during the· first quarter of 2020.
GDP is the total value of all goods and services prod_uced ~ithin the country for a
given period._
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The decline reflected the ,economic hardship. of consumers, whose combined
spending fell ·y 4.8 percent •in the first quarter. Such household consumption
accounted for about three-fourths , of GDP. The lockdowns caused by the
pfuidemic led many small enterprises to ~lose shop and reduced revenues of
bigger companies,. °forcing them to lay c)ff workers. With less money, ·these ,
unemployed workers' familie~ _spent only on essenµal ne~ds, such as food. ~e
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resulting lower.demand for other goods and ·services prompted more companies
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to cut -production and consequently suffer_loss~s. They bring down operating

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· costs further·by laying off more workers. This is what economists r~fer to as the
vicious cycle of aJ1 economic downturn.

The recession started in the first quarte~ of 2020 when GDP shrank as a result _of
the -eruption of Taal Volcano, which disrupted producti~n at ne~by industnal ·
zones. The stdngent quarantine restrictions imposed since mid-March last year
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exacerbated the situation and led the economy to continue shrinking until the firS
quarter of this year.
 Millions of jobs had been shed and thousands of shuttered as a rc.,ult
of the pandemic and lbc en.ming quarantines.
~ lacaftang said it was saddened by the continued shrinking of th.e Philippine
economy, but was looking forward to GDP growth i'n the succeeding quarters of
the year.

Philippine Statistics Authority (PSA) data showed that GDP slid to P4.35 trillion
during the January-to-March period from P4.45 trillion a year ago. All three of
the economy's major production sectors contracted in the first quarter-
agriculture by 1/2 percent; industry by 4.7 percent and servic~ by 4.4 percent.
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·On the other hand, government spending increased by 16.1 percent mainly on the
back of massive infrastructure projects, which lifted public construction by 26.2
pe~nL

Given minimal li~ing of restrictions at the start of the year, Mapa frrst-quartcr
output grew by only 0.3 percent compared to ,GDP in the fourth quarter of last
year-the slowest ·quarter-on-quarter growth since the strictest lockdown in the
second quarter of 2020 W?S gradually eased.

LOWERED PROJECTIONS

Private sector economists said that with the National Capital ·Region (NCR)
Plus-the collective term for Metro Manila and the provinces of Bulacan, Cavite, ·
Laguna and Rizal that accounted for half of the country's economy-under more
stringent quarantine measures since early April due to a surge in COVID-19
cases, second-quarter GDP would ·again contract. compared to the first-quarter
output.
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However, the country's chief economist, Socioeconomic Planning Secretary Karl
Kendrick Chua, was stil~ optimistic that the 2021 GDP growth target of 6.5
percent to 7.~ percent could still be achieved to jump-star a rebound from last
year's 9.6-percent, GDP declinC-:-4e Philippines' worst postwar record.
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Chua, who heads the -state planning agency National Economi~ and Development
Authority (NEDA), said the economy had at least eight more months to catch up.
He said a further easing of quarantine restrictions combined with a safe
reopening of the economy as we11 as faster mass vaccination and better contact
tracing would help in economic recovery moving forward.
Chua added that unlike last year·s enhanced con1munity quarantine (ECQ) when
75 percent or the economy stopped, the recent two-~vcck (April 26, 2021 to May
IO . 2021) ECQ reimposed in NCR Plus and the ongoing modified enhanced
community quarantine (MECQ) allowed people .to go to work and minimized
disruption to livelihoods.
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I-le projected the impact of the ECQ and MECQ in NCR Plus on second-quarter
economic perfonnance to be muted. "'Once the present spike is over.. we can
implement quarantine relaxations in a phased approach to boost our recovery this
year. For instance, we can n1ove NCR toward MGCQ [a less-stringent modified
general community quarantin~ 1, allow families and childn.~ to participate in the
economy and restart face-to-tace schooling." Chua said.