Calibrated reopening of vital sectors key to recovery

MANILA, Philippines — A “prudent and calibrated” reopening of vital sectors will be a key to the recovery of the country’s trade sector, and ultimately, the economy, according to the Department of Finance (DOF).

In his latest economic bulletin, DOF Undersecretary and chief economist Gil Beltran said the trade sector has seen improvements in the past months, reflecting the gradual reopening of the economy after Luzon was placed under enhanced community quarantine in mid-March.

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He said merchandise trade in April, the first full month of lockdown, plummeted by about 60 percent to $6.2 billion from $15.1 billion in the same month last year.

But Beltran said the decline has slowed down in the succeeding months at 35.3 percent in May, 18.7 percent in June and 18.6 percent in July.

The DOF’s chief economist said there were also improvements as seen in the purchasing manager’s index (PMI) of the manufacturing sector, coming from a low of 31.6 in April to 47.3 in August.

“Good macroeconomic fundamentals have cushioned the impact of the coronavirus pandemic. A prudent, calibrated reopening of key sectors of the economy will be key to the recovery of the economy in general and trade in particular,” Beltran said.

Furthermore, Beltran said the government should adopt economic reforms that would attract more investments going forward.

He mentioned the Corporate Recovery and Tax Incentives for Enterprises (CREATE), Financial Institutions’ Strategic Transfer (FIST), Passive Income and Financial Intermediary Taxation Act (PIFITA), as well as proposed amendments to the Public Service Act and Retail Trade Liberalization Act.

“(These) can help the country weather and recover from the impacts of the coronavirus pandemic. Furthermore, improvements in ease of doing business improvements will also be important in adapting to the new normal,” he said.

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Earlier, Beltran said the enforcement of quarantine restrictions and physical distancing protocols to control the spread of the virus has “inevitably” caused collateral damage in the economy.

Such damage plunged the country into a recession in the second quarter, with the gross domestic product (GDP) contracting by 16.5 percent. In the first half, the GDP declined at an average of nine percent.

Beltran said the economic recovery would depend on the country’s ability to manage risks posed by the virus, with no vaccine yet to contain the pandemic.

Also, he said keeping the country’s balance-of-payments manageable, along with other indicators such as budget deficit, inflation and foreign exchange, would help keep the country afloat amid the COVID-19 crisis.

For 2020, the Development Budget Coordination Committee (DBCC) expects the country’s GDP to contract by 4.5 to 6.6 percent.

Still, economic managers expressed confidence that the economy would be able to rebound in 2021, with the GDP seen growing by 6.5 percent to 7.5 percent.

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Article and Photo originally posted by Philippine Star Global last October 5, 2020 12:00am and written by Mary Grace Padin.

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