The country’s economy had reached its worst post-World War II decline due to Covid19, as well as natural disasters such as the Taal Volcano eruption and typhoons in the latter part of last year.
The 9.5% decline in the nation’s gross domestic product (GDP) last year was, according to national statistician Claire Dennis Mapa, the most significant since 1946.
Goods and services produced totaled P17.98 trillion at current prices, whereas in 2019, the economy produced P19.52 trillion, marking 21 years of steady growth since 1998 when the GDP dropped by 0.5% due to the Asian financial crisis.
The pandemic affected the gross national income—the total output of Filipinos at home and abroad—the most. Last year, this number fell by 11.1%, said Mapa, as overseas Filipino workers could not work when countries closed their borders.
He further said that the share per capita—or for each Filipino—of GDP dropped by 10.1%, whereas the per capita GNI slid by 12.3%. This reduction made moving the country up to upper middle-income status farther from reach, a goal which the government originally aimed to reach by next year.
This was compounded by the slowdown of the country’s growth in 2019, which was caused by the delayed approval of the national budget. It resulted in the Philippines remaining a lower middle-income country (which according to the World Bank has a GNI per capita of $3,850 or P184,376).
Socioeconomic secretary Karl Kendrick Chua asserted that despite the setbacks, the country was still on course to achieving upper middle income status by 2022. The GNI per capita was redefined by World Bank to be between $4046 (P193,762) and $12,535 (P600,301).
He also said that poverty-reduction target could be met “earlier than 2022”, in spite of pandemic challenges.
A 5.6% growth in the fourth quarter of last year indicated that the economy was recovering, according to Palace spokesman Harry Roque.
“The good news is even if we are still in negative, our economy improved,” he said. “We can see that the reopening has not been enough for us to return to normal and stop hunger in the Philippines.”
2020 also saw reduced output across three major sectors—agriculture, industry and services—despite the increase of industry and services by 11.6% and 4.5% respectively, within the October to December period. The agriculture sector, in contrast, shrank by 4.1%.
Improved business and consumer confidence, which the government is relying on to boost economy, may prove to be a challenge. According to World Bank surveys done in August last year, one of four breadwinners was unemployed, one in three families went hungry and the same ration had no access to medical care despite Covid19.
Businesses, meanwhile, had sales decreased by at least 60%, while companies involved in construction, education and food had to downsize their workforce. Three of 20 companies had had to close their doors permanently.
The same survey reported that businesses also needed to get government support in order to pay their employees and gain access to low-interest loans, given that they were uncertain about when they could reopen.