Philippine economy seen contracting again in Q1, return to positive growth in Q2

MANILA - A former member of the government's economic team said Wednesday the economy may continue to contract in the first quarter with positive growth returning only in the April to June period. 

Former Socioeconomic Planning Secretary Ernesto Pernia said the country could post year-on-year gross domestic product (GDP) growth in the second quarter as the government further eases restrictions and rolls out vaccines. 

Pernia added that the economy might not return to pre-pandemic levels until late 2022 partly due to the government's sluggish pandemic response. 

"Second quarter we’ll start to be positive. Small positive growth rate. In terms of getting back to pre-pandemic level, siguro most of the economic observers, siguro late 2022 na," Pernia told TeleRadyo.

GDP fell 9.5 percent in 2020 due to the coronavirus pandemic, its worst contraction since the end of World War 2. 

Pernia echoed the views of his successor Acting Socioeconomic Planning Secretary Karl Chua who said the country will only see positive year-on-year growth by the second quarter of the year.

"We attended to this COVID problem late. We should have attended this as early as February like Vietnam. Tayo March na. I think the discomfort of the people is that palagi tayong late eh (We're always late). Slow talaga. Late and slow motion. Tingnan mo tong vaccine," Pernia added.

The former chief of the National Economic and Development Authority (NEDA) is also pushing for "location-specific restriction-easing" to help the economy and boost consumer spending. 

The Philippines imposed one of the world's longest and strictest lockdowns in 2020 to stem the spread of COVID-19.

LOAN WOES SECONDARY

The former NEDA chief also said the government should not worry about piling up loans as interest rates remain low and credit rating institutions have become lenient during the pandemic.

"Yung worry about utang is really secondary. Ngayon mababa ang interest rate. Understanding na rin ang mga ratings agency…Yung other countries they borrowed huge amounts pero hindi naman binabaan credit ratings nila eh," Pernia said.

(The worry about loans is secondary. Today, interest rate is low. Ratings agencies are now more understanding. Other countries borrowed huge amounts but their credit ratings were kept.)

Business leaders earlier called on the government to ramp up spending to power the economy out of recession, saying that the country needed "a bazooka, not a pistol."

Some lawmakers have also called for an even bigger stimulus package, pushing a new P420-billion spending bill called Bayanihan 3. 

The Bangko Sentral ng Pilipinas earlier kept interest rates at 2 percent, its lowest in history. 

• Bangko Sentral keeps interest rates steady