The Philippines Finally Exits Recession But Recovery Is Still A Long Way To Go
The second quarter of 2021 saw the Philippines exit from the pandemic-induced recession. Figures show that the economy grew by a 32-year high of 11.8% in Q2 compared to a low base of -16.9% same time last year when the economy was shut down due to the strict lockdown measure.
Despite that, the economy still managed to end its stay in the negative territory, bouncing back from the recession. The figure is also the best quarterly performance since the 12.0% growth in 1998 fourth quarter.
The industries that made a major impact on the economy were the construction sector with 25.7 percent, manufacturing with 22.3 percent growth, whole and retail trade and repair of motor vehicles and motorcycles with 5.4 percent.
Overall, the industrial sector climbed by 20.8 percent and the services sector with 9.6 percent growth. However, the agriculture sector contracted by 0.1 percent.
On the other hand, household final consumption expenditure (HFCE) went up by 7.2%, the gross capital formation also grew by 75.5%, exports with 27.0 and imports with 37.8% growth. Government final consumption expenditure declined by 4.9%, and the net primary income fell by 53.8%. Lastly, the gross national income also grew by 6.6%.
According to Socioeconomic Planning Secretary Karl Kendrick Chua, the robust performance of the economy is more than just base effects. He highlighted the result of a better balance between addressing COVID-19 and the need to restore the jobs and incomes of the people.
Meanwhile, comparing the Q2 growth to the previous quarter this year, it fell 1.3 percent short. Chua explained that the government had to tighten a bit to curb the surge of COVID-19, explaining the slight reduction in the seasonally adjusted quarter-on-quarter. To briefly recall, Metro Manila went through Enhanced Community Quarantine (ECQ) from March 29 to April 11, which was followed by Modified ECQ from April 12 to May 14. It was then reverted to a General Community Quarantine (GCQ) from June to July until another round of ECQ was announced earlier this August which is set to last until August 20.
He added that had they not managed the risk better and allowed most sectors to operate and implement and enforce the health protocol, that seasonally adjusted quarter-on-quarter would have been worse.
Despite the recovery, the Philippine economy still has a long way to go to hit its 6 to 7 percent target growth. The country’s economy will have to rise by at least 8 percent in the succeeding quarters to reach its target. Whether this can be met will depend on the outcome of how fast the government will address the present spike and how fast it vaccinates the people. To cap it off, the more we vaccinate, the more we can safely reopen the economy.