Diokno said the economy cratered 16.5 percent not because it was weak but because of the enhanced community quarantine (ECQ). Diokno said “the immediate cause for the economic plunge in Q2 (second quarter), that is, the strict, nationwide lockdown is a thing of the past.”
“In the near future, while waiting for the vaccine, policymakers will opt for targeted, localized, village-level lockdowns. Hence, the adverse economic impact on jobs, incomes, and livelihoods will be subdued,” he added.
Duterte, with the advice of his economic management team led by Finance Secretary Sonny Dominguez, imposed a lockdown to contain the virus from the middle of March until the end of April for mainland Luzon, and extended the ECQ up to the end of May in the National Capital Region (NCR).
Despite the protracted lockdown which came at a heavy cost to ordinary Filipinos,, COVID cases have been rising due to the government’s failure to increase testing, expand hospital capacity, and provide subsidies to Filipinos forced to stay at home.
But Diokno was quick to assure that the economic setback was “temporary” and recovery would be quick.
“The contraction is temporary. The economy is robust, characterized by strong fundamentals: falling interest rates, appreciating peso making it the most appreciated currency in Asia; sound external sector with gross international reserves as high as $94 billion; low debt-to-GDP (gross domestic product) ratio which is the envy of many emerging economies; and robust banking industry with good capital adequacy ratio and low net performing loans ratio,” he said.
To save the economic team from further embarrassment, Diokno said it was “inappropriate” to compare the horrible economic numbers in the second quarter of this year to pre-Edsa crisis in 1984-1985, the Asian financial crisis in 1997-1998, and the global financial crunch in 2007-2008.
During the past crisis, Diokno said the peso weakened, interest rates increased, the proportion of debt-to- domestic output increased, the country’s foreign reserves declined, and the banking sector faltered.
“In sum, there were inherent weaknesses in the economy then,” he said, citing also the country was even included as part of those called heavily indebted countries (HICs). (PNA)