• By The Financial District


Finance Secretary Carlos Dominguez III has assured the business community that the Duterte administration is focused on saving lives not just from the coronavirus pandemic but also from hunger and other diseases that could happen as a result of the economic fallout from this global health crisis.

Dominguez said the government is fully aware that fighting COVID-19 should be done alongside efforts to rebuild the economy, given that unemployment and reduced incomes resulting from the lockdowns also have public health consequences.

“We cannot fight a pandemic with a weak economy; nor can we restore economic vigor without solving the public health crisis. We need a healthy people and a strong economy,” Dominguez said in his videotaped message to participants of the 29th North Luzon Area Business Conference, which was organized online via Zoom by the Philippine Chamber of Commerce and Industry (PCCI).

Dominguez lauded private sector employers for their own brand of heroism as they continue to shore up businesses and help their employees survive in this time of crisis.

“We have seen much heroism from all sectors during the five months that the nation has been battling the COVID-19 pandemic. While our medical workers braved the frontlines to save lives and treat the infected—you—our entrepreneurs, worked day and night to shore up businesses and help your employees survive,” Dominguez said. “You have ensured continued access to basic goods and services. The country is grateful for your efforts.”

As for the government, Dominguez said it will continue to be judicious in its use of its fiscal and financial resources, considering that the global health emergency is likely going to be a drawn-out series of battles, with no knockout punch against COVID-19 and its resulting economic crisis.

“We are therefore conserving our fiscal stamina for a full, 12-round fight. Our capacity to fight can and will outlast this health challenge,” he said.

Even though the Philippines may not have one of the biggest economic stimulus packages when compared to other countries, Dominguez said it has performed better compared to some economies owing to its fiscal strengths.

Citing data from various sources, Dominguez said that there appears to be no correlation between the size of a country’s stimulus plan and the coronavirus-induced contraction of its economy.

While the Philippine economy shrank by 16.5 percent in the second quarter with a stimulus package at 4.2 to 6.4 percent of gross domestic product (GDP), Malaysia’s economy contracted even more by 17.1 percent in spite of a bigger economic stimulus equivalent to 18.2 percent of its GDP, he noted.

The United Kingdom (UK)’s total stimulus is at 23.4 percent of GDP but its economy went down by 21.7 percent. Sweden’s economy decelerated by 8.2 percent, despite having a bigger stimulus package of between 10.8 and 16.6 percent of GDP.

“It appears that no matter how much money countries pump into their economies, their GDP would have shrunk massively, anyway. It is not the sheer size of the stimulus package that matters now but also whether it is actually saving the productive parts of the economy,” Dominguez said.

“This is because the problem is not a systemic contraction or a cyclical bust. Simply, necessary mobility restrictions hamper aggregate demand,” he added.

Dominguez said the economy can recover if the country can keep the pandemic at bay so that tough restrictions such as widescale lockdowns are no longer necessary.

“Preventing outbreaks in the workplace is as much a lifesaving responsibility as it is good business practice,” he reminded businessmen at the conference.

Dominguez said the effects of the pandemic would have been much worse had it not been for President Duterte’s prudent approach to fiscal and economic management as reflected in the Philippines historic low debt-to-GDP ratio of 39.6 percent, a 22-year high revenue effort of 16.1 percent of GDP, and infrastructure investments equivalent to 5.4 percent of the economy in 2019, as well as the unprecedented amount of $98 billion in gross international reserves as of July this year, to name a few.

Without continued and increased public sector spending–especially on infrastructure, public health and social protection–the economy would have performed much worse, Dominguez said.