The National Economic and Development Authority (NEDA) is confident that strong domestic demand would withstand the adverse affects of the Russia-Ukraine conflict that threatens the country’s return to pre-pandemic levels within the first-quarter.
At a virtual briefing on Tuesday, March 15, Socioeconomic Planning Secretary Karl Kendrick T. Chua said the Philippines remains on track to hit its 2019 economic output level in the first three-months of the year despite geopolitical crisis.
“We have a very strong potential to grow in the domestic front. Unfortunately, we are facing global headwinds to our economy, [but] we believe we have a very strong domestic economy that can withstand that,” Chua told reporters.
He noted that there have been significant developments locally, particularly with the shift of Metro Manila and some 39 other areas to Alert Level One that added more than P9 billion per week to GDP.
“As of the end of the year 2021, I believe we were P100 billion short from reaching pre-pandemic level. So I still believe that in the first quarter, we will exceed the 2019 level,” the NEDA chief said.
In addition, Chua believes there is still some legroom to further boost business activity in the country in order to cushion the effects of the ongoing global challenge.
“Hopefully, we can shift the entire country to Alert Level One that will add another P16 billion per week. And hopefully, we can open all face to face schooling, which will add another P12 billion per week,” the official pointed out.
Meanwhile, Chua said President Duterte’s economic managers expect the Ukraine war is “temporary in nature,” but despite this assessment, he said the government is prepared to assist sectors affected by the current global tension.
“It will affect some people and some sectors and we are ready to support the affected sectors. We also have to think about our strategies and calibrate our policies so that we achieve the highest gain for the people, not only certain groups or certain sectors,” Chua said.
Chua added that four channels of the economy can be affected by the conflict, and the magnitude would depends on how long the crisis will be.
“Our base model is that this is a temporary situation. It will hit us in four areas, commodity prices, the financial markets, the trade, and also overall confidence. So we are looking at all of that,” Chua said.
“The most important is that we build on our domestic base. We are still far from achieving the normal life that we last saw in 2019,” he added.
According to Chua, most of the country is still not yet in Alert Level One and schools have not fully open.
“I think only 1,000 plus schools have started face-to-face learning and we have 60,000 schools. So there is still a lot more that can be done from the domestic side where we have control to caution any risk coming from the global side,” he said.
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The article was originally published in Manila Bulletin and written by Chino S. Leyco.
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