”Worst is over for the country,” say economic managers

November 10, 2020

Philippine economic managers said it is'' optimistic that worst is over for the country'' after third quarter growth showed a slower rate of decline on Tuesday.

The Philippine Statistics Authority (PSA) said the economy contracted minus 11.5 percent from the revised 16.9 percent in the second quarter.

''The smaller GDP contraction of 11.5 percent in third quarter from a contraction of 16.9 percent indicates that the economy is on the mend. The path is clearer to a strong bounce-back in 2021,'' a joint statement of the country's economic managers said.

''On a quarter-on-quarter basis, the economy grew by 8 percent in the third quarter, reflecting the return of economic activities as the quarantine was eased,'' the statement added.

On the expenditure side, households and firms have begun to recover, with smaller contractions in household consumption, firm investments, exports, and imports.

In particular, goods exports grew by positive 2.2 percent in September, as the economy of our major trading partners in the region recovered, notably China, the statement said.

 With the expiration of Bayanihan 1 in June and Bayanihan 2 still in Congress, government consumption growth slowed to 5.8 percent, the economic managers said.

According to the Department of Budget and Management (DBM), actual infrastructure disbursement in the third quarter exceeded programmed levels by 12.1 percent, although this was lower than third quarter 2019 levels by 28 percent in real terms.

''This is not surprising given the catch-up spending carried out in the second half of last year after the late passage of the 2019 budget,'' it added.

 On the supply side, agriculture growth slowed to 1.2 percent, as the sector faced a number of plant and animal diseases.'' These headwinds, however, had minimal effects on overall food supply as evidenced by falling food inflation in the same period,'' the economic managers said.   

 Industry and services also showed a smaller contraction, consistent with the initial recovery of employment, where some 7.5 million workers returned in the third quarter.

''This reduced the unemployment rate to 10 percent in July from 17.7 percent in April, when the quarantine was at its strictest,'' it said. DMS