Targeted spending to lift economy

Philippines’ GDP contracted by 18 percent year-on-year

Substantial and targeted spending are expected to help lift economy’s recovery and address the increase in budget deficit, an economist said. 

ING Bank Manila senior economist Nicholas Mapa said these can also translate to a faster pickup in the gross domestic product (GDP), which would help limit the widening of the budget deficit to GDP ratio, as growth outpaces the increase in spending, 

Spending on public goods and services more than doubled in April as the government tried to ease the pain inflicted on vulnerable sectors by the COVID-19 pandemic, but revenues suffered due to delayed tax collections, resulting in a P273.9-billion budget deficit—the biggest monthly fiscal gap to date.

Mapa said the big jump in the government’s budget gap last April is expected, given the requirements for the government’s program to address the impact of the coronavirus disease 2019 (Covid-19).

“The battle cry now for the government should be ‘whatever it takes’ with the authorities resisting to enter austerity mode to ensure that the economic hardship is minimized so that we can get the economy back in form at the soonest,” he added.

“Prevention is always better than cure, and the cost of preventing an economy from freefalling at the onset will be less than digging the Philippines out from an all-out economic depression,” Mapa added

A modified ECQ is in effect until May 31 for Metro Manila, pending authorities’ decision on whether to loosen this or not while most areas around the country are now on general community quarantine. More..

The pandemic has resulted in a 0.2-percent contraction of the domestic economy, as measured by gross domestic product (GDP), in the first quarter this year, the first negative growth since the fourth quarter of 1998. The government and private sector need to work something out to lift economy.

-Stockbytes PH, May 27, 2020

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