Palace banks on govt spending, BBB program as economy shrinks for first time in 22 years

MANILA, Philippines — Malacañang on Thursday expressed optimism that the Philippine economy will bounce back strongly after it shrank for the first time in 22 years.

The Philippines’ gross domestic product (GDP) fell 0.2 percent year-on-year in the first quarter, a period marred by the Taal Volcano’s eruption and the coronavirus disease 2019 (COVID-19) crisis.

According to the Philippine Statistics Authority,  the last time that GDP shrank was in the fourth quarter of 1998.

While the decline was just a “minimal contraction,” Presidential spokesman Roque said that the Philippines may experience a “steep decline” in the second quarter due to the implementation of the lockdown which temporarily closed most businesses and industries in Metro Manila, the country’s economic center.

“We expect the economy to shrink even more during the month of April because the whole month of April is basically under ECQ (enhanced community quarantine) and the first two weeks of May as well. We definitely expect a big contraction but the economic planners are very vigilant,” Roque said in a televised press briefing in Malacañang.

Nonetheless, the Palace official is confident that the economy is off to a “very strong rebound” behind the Build Build Build program.

“We expect a very strong rebound courtesy of the Build Build Build program of the government, and number one, very prudent fiscal policy as well as prudent monetary policy. This means, we’re using public spending as a tool for economic recovery and we’re also using money supply as a tool also for economic recovery,” he said.

Finance Secretary Carlos G. Dominguez III earlier conceded that the full-year GDP may be worse than the government’s projection last month that the economy may post zero growth at best, or shrink by 1 percent at worst.