Beyond the News by Atty. Junie Go-Soco
Beyond The News

Is economic recovery on the horizon?

Mar 8, 2021, 10:00 PM
Atty. Junie Go-Soco

Atty. Junie Go-Soco

Columnist

As sure as the spring will follow the winter, prosperity and economic growth will follow recession. – Bo Bennett is a businessman, author, programmer, philanthropist, martial artist, and motivational speaker.

Is economic recovery on the horizon? Maybe not.

President Rodrigo Duterte’s remarks during the arrival of the first COVID-19 vaccines called Sinovac raised many eyebrows.

When the vaccines arrived, he reportedly said that “The Philippines may have to wait until the first or second quarter of 2023 before it can return to normalcy or a pre-pandemic condition.”

However, this was modified or clarified by Trade Secretary Ramon M. Lopez, who said that the Philippine economy might return to its pre-pandemic level before 2023.

Earlier, economic managers projected that economic growth would be around project 6.5% to 7.5% this year and 8% to 10% in 2022.

We have a case of mixed signals.

So, who should we believe?

Earlier, the Organization for Economic Cooperation and Development said the Philippines would post a slower economic growth of 5.9 percent in 2021, with net exports and public investment expected to support the partial economic recovery.

Last year, the economy shrank by 0.7 percent year-on-year in the first quarter, a record 16.9 percent in the second quarter, 11.4 percent in the third quarter, and 8.3 percent in the fourth quarter - a 9.5-percent full-year drop.

Some economists see the partial recovery of the country’s 2019 output this year and that “we will only be able to fully recover sometime in the latter part of 2022.”

Bank of the Philippine Islands lead economist Emilio Neri Jr. estimates that the economy will likely continue to shrink in the first quarter of the year. A turnaround in the subsequent quarters will lead to full-year growth of 6.5 to 7.5 percent.

Although Neri sees the partial recovery of the country's 2019 output this year, he said, "we will only be able to fully recover sometime in the latter part of 2022."
“The Philippines’ economy is expected to bounce back and expand solidly in 2021—at one of the fastest rates in the region—on recovering foreign demand and returning household consumption and fixed investment,” he goes on to elaborate his point.

It seems that the private sector is more confident of an early recovery than the government.

This positioning by the government is highly unusual. Normally, the government sector is more optimistic than the private sector, obviously to boost investor confidence.

In China, the view is very different. Its economy grew 2.3 percent in 2020, making China the only major economy in the world to avoid a contraction last year as many nations struggled to contain the Covid-19 pandemic. Economists even forecast an expansion that will be the fastest pace in a decade at 8.4 percent.

Given this background, China's leaders set an economic growth target of "above 6 percent" for 2021.

"A target of over 6 percent will enable all of us to devote full energy to promoting reform, innovation, and high-quality development," according to Premier Li Keqiang.

With China containing the coronavirus domestically thanks to strict lockdowns and mass virus testing, the world's second-largest economy are set for a strong comeback.

"In setting this target, we have taken into account the recovery of economic activity," Li continued.

Quite remarkable. No recession, fast recovery. The Chinese way.

But since our country is in a recession, this quote is relevant:

“It’s a recession when your neighbor loses his job; it’s a depression when you lose your own.”

―Harry S. Truman was the 33rd president of the United States, serving from 1945 to 1953, succeeding upon the death of Franklin D. Roosevelt after serving as the 34th vice president. He implemented the Marshall Plan to rebuild Western Europe's economy and established the Truman Doctrine and NATO to contain Communist expansion.


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