MANILA, Philippines – Philippines is wasting 8. 3% of its economy this year, the largest annual decline in gross domestic product (GDP) in history, as the COVID-19 pandemic has shaken customer confidence and personal investment through extended EU quarantine measures, according to the International Monetary Fund (IMF).
Amid the pandemic, the IMF expects the unemployment rate in the Philippines to rise to 10. 4% in 2020 from 5. 1% in 2019.
GDP fell to a record 16. 5% year-on-year in the period april to June, at the height of the region’s longest and strictest COVID-19 closure, eliminating millions of jobs and threatening progress opposed to poverty alleviation in years.
“Low public confidence and weak remittances from the pandemic are expected to continue to weigh on investment and personal consumption,” Yang said.
“The negative effects of COVID-19 are only partially offset by political support,” Yang added.
While millions of Filipinos paint or live in the context of a global recession, the IMF report on OME states that “the threat of a decrease in migrant bills and transfers to their home countries is very high. “
The sharp fall in remittances would basically be felt in labour exporting countries such as Bangladesh, Egypt, Guatemala, Pakistan, the Philippines and those in sub-Saharan Africa.
“A weakening of remittance flows has weighed on domestic spending in the Philippines,” the IMF said.
The IMF also sees that the unemployment rate will fall to 7. 4% in 2021, still above the prepandemic level.
“We have noticed symptoms of recovery in high-frequency knowledge with the slow reopening of the economy,” Yang said.
“Real GDP is expected to increase to 7. 4% in 2021, helping to overcome, in addition to the base effect, an expected uptick in the so-called repressed due to the easing of quarantine measures and the continued effects of policy easing in 2020,” Yang said.
However, the pandemic had already wreaked havoc on the economy. Yang claimed that “significant scars (such as hysteresis and bankruptcies) are expected. “
When asked how the Philippines can recover from the pandemic-induced recession, regain jobs, and reduce the number of other people falling into poverty, Yang said: “It is vital to maintain accommodative macroeconomic policies in the recovery phase and lead to undertake structural reforms to create more enabling a more supportive business environment and provide a stronger social safety net for the handicapped and vulnerable.
“Once a sustainable recovery is underway, fiscal policy priorities deserve to move from source of income to aggregate demand,” Yang said.
This comes with “a renewed infrastructure boost in emerging expansion spaces such as digitization, physical care, and climate change,” according to Yang.
“Priority for short-term investment deserves to be given to projects that generate faster jobs. In addition, social coverage systems deserve to be strengthened as existing measures are eliminated from transitory sources of income,” Yang said.
“Monetary policy deserves to remain accommodative, given weak economic activity in a outlook for forward-looking and benign inflation. The BSP has room for additional rate cuts if necessary,” added Yang, an acronym for Bangko Sentral ng Pilipinas.
But Yang said that “COVID-19 leads to a deterioration in the quality of banks’ assets, given the expected loss of borrowers’ source of income. “Philippine financial authorities, Yang said, “closely monitor underlying vulnerabilities and prepare contingency plans. “supported through reforms to the resolution mechanisms. “
Yang said reforms will intensify as they will “strengthen post-COVID-19 recovery and long-term expansion and poverty reduction. “
Yang said these measures were to “complement ongoing social assistance programs”:
“In the long run, more resources and incentives for adaptation to climate replacement and mitigation will be to drive investment and adjustments in emission patterns, making expansion more resilient,” Yang said.
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