Economic team plots recovery plans after 'zero growth' this year

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Metro Manila (CNN Philippines, April 9) — Finance Secretary Carlos 'Sonny' Dominguez III said Thursday that although the economy is "well-prepared" for economic shocks, the COVID-19 impact could still lead to a stagnant national output, or even a contraction, this year.

Around 1.2 million workers will suffer unemployment, Dominguez predicted, adding this number remains at par with lowest unemployment rate ever recorded.

He said the economic team and the central bank are working on a recovery program and that there are available funds to aid low income families, workers in small and medium enterprises and the healthcare sector.

“Itong [This] COVID-19 has hit us in a very hard way … Ang estimate natin [Our estimate is], our GDP growth will be zero or minus 1 percent,” Dominguez said in a briefing with President Rodrigo Duterte other Cabinet secretaries aired in the wee hours of Thursday.

Dominguez also noted that government expenditures will further exceed revenues. The national debt might also grow from 41 percent to 47 percent of what the economy produces.

The increase in government spendings and borrowings is "to make sure [people] have food in the table during this time," he said.

“For the economists po, tignan po natin yung budget deficit natin from 3.2 percent, lalaki ng 5.3 percent,” Dominguez said.

[Translation: For the economists, take note of the budget deficit which will increase from 3.2 percent to 5.3 percent.]

“In other words, we will be spending more than we will be collecting [taxes and other revenues],” he explained.

‘Well-prepared’ for economic shocks

Dominguez said that although the COVID-19 slapped Philippines with "a bad luck," the country remained "well-prepared" for economic shocks.

He said this is the result of "conservative spending and efficient collection" of taxes. The Philippines’ economy expanded 6.4 percent in 2019, he noted.

He said the government economic team and the central bank are working on a recovery program and that there are available funds to aid affected households and soften the economic impact of COVID-19.

But if the budget for the government’s response to COVID-19 is still not sufficient, they will seek help -- in the form of new borrowings -- from the commercial financial market.

He also raised the possibility of borrowing around US$5.6 billion (worth more than P283 billion) from the Asian Development Bank, which has earlier extended grant, which is a financial assistance that doesn't have to be paid back, to help the Philippines respond to the coronavirus outbreak.

CNN Philippines' Catherine A. Modesto contributed to this report