Rosy GDP forecasts sans COVID component is 'rearranging furniture in Titanic': Pangilinan

THE recovery of Philippine economy is anchored on how well the government manages the spread of the COVID-19 pandemic, said Senator Francis "Kiko" Pangilinan at the briefing of the Development Budget Coordinating Committee on the Proposed 2021 National Expenditure Program.

"Are we progressing [in containing COVID-19]? Where are we headed? I think we have to answer these questions first before we talk about [economic] projections in the budget and how much are we going to spend where. The elephant in the room is: where is our campaign to address the COVID spread headed?" Pangilinan asked the government economic managers who presented the assumptions for the P4.5-trillion government budget for next year.

In his presentation, Director General Karl Chua of the National Economic and Development Authority (NEDA) said the Philippines has a promising outlook for the next two years with GDP growth assumptions of 6.5% to 7.5% in 2021 and 2022.

"Sabi nga ni Senator [Imee] Marcos, very rosy yung projections. But the response of Secretary Chua is it was based on their assessment of how we are progressing on our campaign against COVID," Pangilinan said.

But, the senator said, "Given that we have 241,987 cases as of yesterday and 3,281 new cases. Is the Economic Team happy with the situation in terms of how we are managing the spread of the disease? Are we content? What are our benchmarks in terms of establishing that we are actually effectively managing the spread of the disease? As pointed out by Senator [Ralph] Recto and Senator [Franklin] Drilon, do we have the confidence of investors and consumers?"

Over the last several years, consumer spending and services has driven Philippine economic growth. With the pandemic, economic decline coincided with the drop in people's mobility and the service sector. Record-high unemployment has paralyzed consumption because of consumers' lack of income.

Pangilinan also pointed out that the proposed 2021 budget of the Department of Health of P131 billion is lower than this year's P181 billion when the impact of the pandemic is still expected to carry over to next several years.

"We have reduced the health budget for 2021...Number 5 sa budget hierarchy ang DoH (Department of Health). How do we re-imagine the [COVID] campaign? The Senate has already asked for the resignation of Secretary [Francisco] Duque since last April. The Committee of the Whole has found him liable and negligent and we are still projecting a rosy picture for 2021 with this kind of management," he said.

"The future of the economy depends precisely on how we are going to manage COVID in the next several months or years. And if that is the elephant in the room, I hope the Economic Team could come up with a stronger position on how we are going to manage the spread of the disease. If we don't address that, sad to say we are just re-arranging the chairs in the Titanic," he added.

The Philippine GDP has dropped by 16.5% in the second quarter of 2020, the biggest drop on record and the worst downturn since World War II. It is the worst performer in ASEAN for the second quarter of 2020.