MANILA - The "tiger" that is the Philippine economy has fallen into a coma.
An economics professor said this Thursday, explaining how the economic contraction in the country was rooted in reduced business activity because of lockdowns imposed to stem the spread of COVID-19.
The country has plunged into a recession, or two consecutive quarters of economic contraction, in the second quarter largely due to the COVID-19 pandemic and resulting lockdowns that started in March.
The second quarter gross domestic product dropped 16.5 percent, from -0.7 in first quarter.
"Ibig sabihin noon ‘yung ating activity, 'yung business activity ay lumiit... To be expected 'yan kasi nagkaroon ng pandemya, nagkaroon ng lockdown, tumigil ang turista, tumigil ang negosyo," UP School of Economics professor Agustin Arcenas told Teleradyo.
(This means business activities dwindled. That is to be expected since there is a pandemic, there are lockdowns, tourists, businesses stopped.)
"Hindi lang natulog ang tiger, mukhang na-coma muna siya," he added.
(The economic tiger didn't just sleep, it fell into a coma)
Socioeconomic Planning Secretary Karl Kendrick Chua said Friday only 25 percent of the economy was open during the enhanced community quarantine (ECQ), the stricted form of lockdown in effect in the early months of the pandemic.
There was 75-percent economic activity under the general community quarantine, which was in effect until the start of the month. With the modified ECQ back amid the surge in COVID-19 cases, the economy is now 50-percent open.
Household consumption also declined by 15.5 percent for the period as a result of reduced income of workers and uncertainty in spending for those who have funds, he said.
"'Yung mga mayroong naisubi, hindi muna gagastos kasi mataas ang uncertainty. Kakabahan ang mga tao, hahawak muna 'yan sa pera," Arcenas said.
(Those with savings, they won't spend since the uncertainty level is high. People are worried, they will hold on to their money.)
The reduced income of every household is a result of workers getting terminated as businesses closed shop due to the COVID-19 pandemic.
Unemployment in April ballooned to 17.7 percent, equivalent to 7.3 jobless Filipinos. This figure can influence not just household spending, but the bigger economic picture, he said.
Once household income decreases, consumers will spend less, prompting businesses to reduce production. The reduction in manufacturing could result in retrenchments and, eventually, lower taxes will be paid to the government, Arcenas said.
When tax collection dwindles, government services will also decline, he said.
Philippine economic growth or contraction should also be compared to its peers, as it could be a basis of how the country handles the pandemic, Arcenas said.
He said the country has seen one of the worst contractions this quarter.
"Isinasalamin nito kung na-manage at hindi na-manage ang epekto ng pandemya sa ating bansa. Ang kapasidad ng mga namumuno dito nasusukat, dahil sa ibang bansa nakapagtala ng hindi masyadong malaking contraction," he said.
(This mirrors whether or not we were able to manage the effects of the pandemic on the country. The capacity of our leaders can be measured here. There are countries with lesser contraction.)
The country has not been the most attractive to investors compared to its peers even before the pandemic and the crisis eventually "exacerbated" it, he said.
Although economic managers are confident that the Philippines can recover, the government lowered its 2020 forecast, saying that the economy could contract by 5.5 percent this year from its original estimate of 3.4 percent.