Contagion risks threaten economic recovery – DOF

by Czeriza Valencia (The Philippine Star), 15 May 2021

MANILA, Philippines — While there are signs that the economy is on the mend, recovery continues to be threatened by restrictions enforced to control the spread of COVID-19, the Department of Finance (DOF) said yesterday.

In an economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the 0.26 percent quarter-on-quarter growth in the first quarter from last year’s final quarter indicates recovery amid a still challenging environment.

“Recovery, however, continues to be threatened by risks posed by the virus. This health issue should be effectively addressed and it is encouraging that the much-needed vaccines have started arriving,” said Beltran.

The economy contracted by 4.2 percent in the first quarter, marking the fifth straight quarter of decline and which was worse than the 0.7 percent contraction in the same quarter last year.

This, however, was less than the contraction of 8.26 percent in the last quarter of 2020.

From the expenditure side, double-digit declines were seen in household consumption and capital formation as the prolonged lockdown suppressed business activity and reined in consumption.

This was only tempered by growth in government spending on infrastructure and other programs meant to provide stimulus to the economy.

On the supply side, all three major sectors – industrial, agriculture and services – registered declines.

The manufacturing subsector managed to eke out a positive growth of 0.5 percent after four quarters of contraction.

Stronger growths were seen in financial services and information and technology as more people turn to digital channels for work and personal needs.

The NCR Plus bubble — composed of National Capital Region (NCR), Bulacan, Cavite, Laguna, and Rizal provinces — transitions to a more lenient community quarantine status today (May 15) as the number of confirmed infections have breached the one million mark in the country.

These areas, among the economic powerhouses of the country, were forced into strict quarantine for more than a month, putting millions out of work and forcing businesses to again scale back operations.