Like Sen. Manny Pacquiao in the boxing ring, the Philippines has the "fiscal stamina" to bounce back from the recession spawned by COVID-19, knowing when to fire those punches to last the full 12 rounds, the head of President Rodrigo Duterte's economic team said Thursday.
The President's economic managers said they would address the recession with three tools: a new pandemic-response law, Bayanihan 2, massive infrastructure spending and a recalibrated 2021 budget. It will be a long battle, which can be won with the help of a vaccine, said Finance Sec. Carlos Dominguez.
The economy shrank by 16.5 percent in the April to June quarter, reflecting how the strict lockdown at that time shut businesses and kept consumers from spending. It was the steepest drop in gross domestic product since 1981 and the first recession since the mid 1980s.
"When Sen. Pacquaio trains for a fight, he prepares for 12 grueling rounds as there can be no knockout punch that cuts our fight short before the vaccine is developed. The government's ability to sustain the fight depends on our fiscal stamina. We have the resources necessary to endure this challenege but we must also conserve our resources for succeeding rounds of this fight," Dominguez said in a virtual press conference.
"The COVID crisis will be a drawn out series of battles and the war will only be conclusively won with the development and wide availability of a vaccine. How close to normal we can live until then will depend on everyone's efforts. Relief efforts and the largest economic stimulus program in our history are being undertaken," he said.
One month of lockdown during the second quarter cost the economy P1.5 trillion, said Acting Socioeconomic Planning Sec. Karl Kendrick Chua. The full-year GDP target for the year was revised lower to -5.5%, he said.
The highest lockdown, ECQ was gradually eased until July 1, when the most economic activity was allowed in Metro Manila, then placed under the second lowest quarantine, GCQ. However, the capital region along with Bulacan, Laguna, Rizal and Cavite were returned to MECQ, the second highest form of restrictions to stop cases from rising fast.
Fiscal and financial measures aimed at reviving the economy will amount to P995 billion, Chua said. This will include capital infusion for government financial institutions to offer loans to small businesses.
"These are extraordinary times and the road ahead of continues to be challenging and uncertain. Working together to address this unprecedented crisis is our best recourse," Chua said.
Among other budget items aimed at the pandemic, the Philippines alloted P200.9 billion for cash aid or social amelioration, P7.4 billion to the labor department and P11.1 billion to agriculture, Budget Sec. Wendel Avisado said.
Dominguez said the March lockdown showed "decisive" action from the government to save lives. With high credit ratings, he said Manila took out loans at deeply concessional rates.
There are signs of a recovery in consumption, the main engine of the economy, he said as both the Bureau of Internal Revenue and the Bureau of Customs exceeded their respective July targets.