The pandemic has been tough on everyone. COVID-19 brought with it an unprecedented economic crisis, as necessary lockdowns were implemented to help curb its spread. The 2020 PH economy fell as expected. However, all signs point to recovery, despite it being a tumultuous year.
It might seem that tough times are ahead, but we must not lose hope. We didn’t just face a global pandemic, but also the Taal Volcano eruption at the start of the year, as well as several devastating typhoons. But as well know, Filipinos are resilient – despite all this, we continue to press on.
Let’s look at what happened this year, and why our economic managers remain optimistic for 2021.
Entering 2020 in a position of robust growth
We entered the year as one of the strongest economies in Southeast Asia. All economic fundamentals point to a stronger economy. Inflation was well within target for 2019, and GDP growth was above-average. Even the poverty threshold fell, meaning more and more Filipino lives are improving. 2020 seemed like it was going to be our year. Economic growth seemed inevitable.
When the necessary lockdowns started in March, that dream of a constantly-growing PH economy seemed to vanish. Numerous companies and businesses closed. However, just like what our economic managers predicted, the economy was in a good place to withstand the threat of COVID-19. Despite all the economic contraction we were experiencing, the economy was able to weather the storm of the pandemic.
“Nagkaroon po ng report ang prestihiyosong magazine na The Economist. At ang sabi po ng The Economist, ang Pilipinas daw po ay pang-anim sa emerging economies na mayroong high-level of financial strength,” said Presidential Spokesperson Harry Roque last May.
Roque was citing a report released by The Economist. It showed the Philippines at 6th in their rank of emerging economies, and 1st in Southeast Asia. The Department of Finance (DOF) took this as a good sign, and said that the 2020 PH economy was “better positioned to overcome this situation [now] than at any other time in recent history.”
Macroeconomic Fundamentals continue to be stable
President Rodrigo Duterte reiterated this in his 5th State of the Nation Address (SONA) back in July. Data during this time backs up this assertion, as our macroeconomic fundamentals remained stable during the pandemic.
Inflation was kept in check, and the Philippine peso continues to appreciate. We even got a credit rating upgrade from the Japan Credit Rating Agency (JCR). Despite the contraction of the economy, we are actually doing quite well.
One important indication that the 2020 PH economy is bouncing back is actually unemployment rates. Understandably, unemployment rose at the height of the lockdowns. However, just this October, the unemployment rate was recorded at 8.7% – from April’s 17.7%. This points to the economy slowly opening up again, and Filipinos getting new jobs amid the pandemic.
PH Economy on the Road to Recovery
Finance Secretary Carlos G. Dominguez III said in an earlier statement that he expects a “strong recovery” for the economy in 2021.
“We are seeing a very strong recovery as we ease up the economy. We have a very good economy. Unfortunately, the contagion has forced us to throttle it down. But as we open up, we can see a very strong recovery through jobs,” said Dominguez.
Circling back to strong economic fundamentals, the Asian Development Bank (ADB) projects that the Philippine economy will “bounce back”, and actually experience economic growth again in 2021.
“We believe the worst is now over and that the contraction in GDP bottomed out in May or June this year. The package of measures the government rolled out such as income support to families, relief for small businesses, and support to agriculture in the second quarter all helped the economy to bottom out,” said ADB Country Director for the Philippines Kelly Bird.
“We expect the recovery to be slow and fragile for the rest of this year, and growth to accelerate in 2021 on the back of additional fiscal support and an accommodative monetary policy stance.”
2021 Budget Approved
Meanwhile, President Duterte’s has already approved a ₱4.5-trillion national budget for 2021 just last Monday. This early budget approval should hopefully serve as the spark of continued improvement, not just of our economic fundamentals, but the lives of every single Filipino in more direct ways.
“Every centavo of this budget must be spent to ensure the nation’s recovery, resilience, and sustainability. Let me, therefore, serve an assurance to the Filipino people—this coming year, we intend to recover as one nation,” said Duterte as he signed the 2021 budget into law.
Things are looking up. The 2020 PH economy was able to survive a pandemic and several natural disasters, and all signs are pointing to faster recovery for the country. Padayon, Pilipinas!