#ASKNEDA MEDIA BRIEFING
STATEMENT OF ACTING SOCIOECONOMIC PLANNING SECRETARY
KARL KENDRICK T. CHUA
July 10, 2020 | 10:30AM
Colleagues in government, friends from the media, fellow Filipinos, a pleasant morning to all of you.
Welcome to another #AskNEDA Media Briefing, where we will be discussing recent economic developments and our digital readiness in the new normal.
Since the start of the year, our country has faced significant and unexpected socio-economic shocks. The COVID-19 pandemic has certainly brought serious challenges and uncertainties to the country’s growth and development prospects. But the Philippines has strong economic fundamentals to address the impact of the pandemic.
The first 100 days since March 16, 2020 under community quarantine have helped us buy time to improve our health system capacity and save thousands of lives from COVID-19. According to two modelers, between 59,000 and 171,000 lives were saved, while between 1.3 and 3.5 million cases were prevented, including some 68,000 severe and critical cases at the peak day.
The decision to put most of the country in community quarantine is a prudent one, but like all policy decisions, there are tradeoffs. The community quarantine has come at a huge cost to the economy, but lives are our priority.
After several months of dealing with the virus, the global community of experts and policy makers have come to the conclusion that the virus is not going to be eradicated anytime soon. We will have to live with it for some time. We will have to adjust both our policies and personal behaviors.
The cost-benefit tradeoff has now shifted from just saving lives from COVID-19 to saving lives from all other factors such as hunger from loss of income and other diseases, including those caused by other types of viruses, bacteria, genes, and lifestyle.
This means a rebalancing of the health and economic objectives is now needed to prevent serious negative consequences to present and future welfare of everyone.
Recent developments show that the economy has begun to recover, but from a very difficult position.
International Merchandise Trade
Today, the Philippine Statistics Authority reported that the country’s total merchandise trade registered a slower decline of 38.7 percent in May 2020, after a steep 59.5 percent decline in April 2020. Breaking this down, merchandise exports declined by 35.6 percent, while imports fell by 40.6 percent, year-on-year in May 2020. Although still negative compared to last year, this represents slight improvements compared to last month.
The slower decline in trade performance is a welcome indication that economic activity has started to pick up with the relaxation of quarantine measures in certain areas, the gradual reopening of business, and the restarting of production in both the country and its trading partners.
Export of manufactured goods, which accounts for almost 80 percent of total exports, is seen to gradually recover as the latest results of the Purchasing Managers’ Index (PMI) for the Philippines rose from 40.1 in May to 49.7 in June.
The Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI) also indicated a gradual pick-up in semiconductors exports in the coming months and projected a flat growth in 2020, notwithstanding the on-going lockdown in Cebu where some of the electronics firms are located.
Monthly Integrated Survey of Selected Industries (MISSI)
Likewise, statistics released in the past week have shown that the manufacturing sector as a whole is also showing signs of recovery based on the results of the Monthly Integrated Survey of Selected Industries for May 2020. Despite the decline in the volume of production, we saw an increase in the capacity utilization of some of the largest sub-groups, like food and beverage manufacturing in May compared to April.
Meanwhile, we expect that inflation, which stood at 2.5 percent in June 2020 will remain well within the target range of 2 to 4 percent this year. As the COVID-19 pandemic continues to affect the daily lives of Filipinos, we will closely monitor all possible upside risks to inflation to ensure that commodity prices remain low and stable to preserve the purchasing power of Filipino consumers especially those in the bottom 30 percent of income households.
Digital technology can significantly increase efficiency in business operations and public service delivery. Online transactions will now become the new standard for engaging with clients, buyers, and suppliers, therefore, both public and private sectors need to invest in digital technology. Later, Usec. Rose Edillon will expound on this.
More importantly, we need to maximize the benefits of greater use of technology in supporting the agriculture value chain through projects such as the Department of Agriculture’s eKADIWA, an online marketing platform that directly links producers and agri-entrepreneurs to consumers, as well as the Supply Chain Analytics (SCAn) Dashboard and the SCAn Reporter. These will help in maintaining price stability through unhampered flow of goods.
UPDATED PDP 2017-2022
Currently, the government, led by NEDA, is updating the Philippine Development Plan (PDP) 2017-2022, which aims for a healthy and resilient Philippines. Following our assessment of the impact of the COVID-19, we have been reviewing our strategies and policies and we aim to release the updated PDP this August.
Several strategies need to be scaled up and fast-tracked, particularly those in technology and innovation. These will help the Philippines become better prepared against future disruptions. The updated PDP will also incorporate our resiliency plan, which will guide us in ensuring responsiveness, continuity, and adaptability of our strategies and reforms to the new normal. We remain committed to addressing immediate challenges without losing sight of our medium- and long-term goals.
As we transition to a new normal, the government will continue to support the recovery of the economy. We are closely working with Congress to pass the recovery program package, which includes both fiscal and financial sector provisions to support healthcare, as well as affected firms and workers.
Opening up the economy and bringing back livelihoods safely require massive testing, including workers. For this, we support the decision to expand the testing protocol, to begin testing workers also, to bring back confidence to the economy. We also support the resumption of sufficient and safe public transport to facilitate the return to work.
A key provision in Bayanihan II is to finance the testing of around 10 million Filipinos, including workers, over the next 12 months. This requires increasing testing from the current peak of 22,700 to around 32,000 tests per day in the coming weeks. This would be sufficient to bring down the positivity rate to below 5 percent. Increased testing, tracing, isolation, and treatment are crucial to boost confidence, get people back to work, and restore consumption demand.
As confidence in work is restored, we also need to ensure sufficient and safe public transport. The Bayanihan II has provisions that can support the public transport system, including service contracting of PUVs to incentivize the resumption of operations, following reduced capacity and sanitation standards.
Once evidence of steady progress towards meeting the health targets is observed, we can further relax the community quarantines and move toward more localized quarantine at the barangay or municipal level, as needed.
As we recover, our socioeconomic policies will have to be responsive and adaptive to ever-evolving realities. Rest assured that the economic team will continue to work hard in restoring our confidence, our growth trajectory, and enabling every Filipino to reach our shared aspirations: matatag, maginhawa at panatag na buhay para sa lahat.