The second quarter GDP result is expected, given that the whole country was on different stages of community quarantine levels during the period, and even heightened quarantine for mega Metro Manila, Cebu, and Davao, which are the highly urbanized centers in the country.
We recognized the primacy of health over economy, as the country tried to build up more testing capacities and health and treatment facilities.
But we also recognize that we are now on the second phase where the general direction is toward safe and gradual reopening of the economy, as we want to bring back jobs for our countrymen, while still ensuring strict health protocols.
But in the process of managing and dealing with virus, we just have to adjust and calibrate our moves–that is, to move forward, but step back, when needed, until we have a vaccine.
With respect to our sector in the GDP, the Industrial sector accounts for 28% of GDP in terms of value, with Manufacturing accounting for more than 60% of Industry. In terms of employment, Industry accounts for about 17% of the national total GDP—with manufacturing and construction each accounting for about half of this.
— As the strict lockdown was introduced towards the end of the 1st Quarter and continued in the 2nd Quarter, the Industry (including Manufacturing & Construction) and Services sectors were the most affected because of their closures.
— Though there was a moderate decline in Purchasing Managers’ Index (PMI) in July, the 48.4 recorded is still significantly higher than the PMI of 31.6 registered in April. Moreover, as long as the quarantine restrictions are eased, Industry is expressing optimistic—as the 12-month outlook for production (Future Outlook Index) was broadly positive in July when NCR and Mega Manila were under GCQ. Around 46% of PMI survey respondents expect output to increase while only 13% projected a decline.
Moving forward, it is important that we stay the course in resuming soon the safe and gradual reopening of the economy.
DTI is pushing for REBUILD: REvitalizing BUsinesses, Investments, Livelihoods and Domestic Demand. It is a strategy aimed to jumpstart and reinvigorate the economy through revitalizing consumption and enhancing production capacity.
We must pursue strategic reforms we have yet to do. These major reforms include Corporate Recovery and Tax Incentives Reform Act (CREATE), and the new stimulus package, also known as Bayanihan II or the Bayanihan to Recover As One, which will both save companies and jobs and provide income opportunities that will then improve consumer confidence and restimulate demand. This is important to attract more production activities and create a better business environment for investments.
Part of stimulating demand is also the current campaign of the Department of Trade and Industry (DTI) to “BUY, BUY, BUY Local”, to patronize locally produced goods in order to generate more local employment.
This also includes promoting online platforms, strengthening consumer protection, enforcing product standards compliance, improving investment climate, and encouraging rural development.
Pump priming the economy and investing in vital economic infrastructures as in the “Build, Build, Build” program are likewise key to raising the demand side.
On the supply side, we should enhance production capacities, in Agriculture, Industries, and Services that will help build our export competitiveness and manage imports. Sectors to push further include basic necessities like food, health, education, those in the Fourth Industry Revolution, those addressing the industry value chain gaps, and those developing modern Philippines and innovative MSMEs.