Losses to the national economy may reach P3.6 trillion by yearend due to COVID-19 pandemic and the three recent strong typhoons, according to Sen. Ralph G. Recto, a former National Economic and Development Authority (NEDA) Director General.
This includes P1.8-trillion lost due to COVID-19 and around P1 trillion to P1.8 trillion in opportunities lost due to the typhoons, Recto said.
Recto added this makes it difficult for government to achieve its economic growth targets for 2020 and even next year. “In fact, [given these] numbers, it will take about two more years to get back to 2019. And that assumes that their projections are correct.”
Senate Finance Committee Chairman Sonny Angara said NEDA agreed with the assumption that the country can return to “normal”.
Recto said if the country did not experience a pandemic, the national economy would have grown to about P20 trillion to P21 trillion against the projected P19 trillion for 2020, adding that keeping the GDP’s losses to a contraction of just around 6.6% this year will be difficult.
Ateneo Center for Economic Research and Development (ACERD) Director Alvin P. Ang said the country’s full-year GDP could contract by 11% by year end, adding that in the fourth quarter, GDP could contract by around 12%. This takes into account typhoon losses which could equal 5% to 8% of the fourth-quarter GDP.
The Office of Civil Defense estimates that only P82 billion was lost from the typhoons, but Ang said the amount could reach P200 billion to P300 billion.
This accounts for the damage as well as other lost economic opportunities.
Last week, economists said an economic recovery may take longer than earlier expected because consumption spending remain low following the release of third-quarter National Income Accounts (NIA).
Earlier, the Philippine Statistics Authority (PSA) reported that GDP contracted 11.5% in the third quarter, resulting in the GDP contracting an average of 10% in the last three quarters.
Based on PSA data, even those with the means are keeping their cash as shown by the steep decline in spending for luxury items.
The largest decline in household consumption was on recreation and culture with a contraction of 59.3%; restaurants and hotels, 49.9%; and transportation, 33.4%.
On the expenditure side, valuables posted the largest contraction at 53.2%, a significant reversal from its year-on-year growth of 182.9% in the third quarter last year.