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Speeches & Transcripts June 9, 2020

Opening Remarks at the Launch of the Philippines Economic Update Braving the New Normal

Good morning everyone.

Thanks a lot for joining this launch of the Philippine Economic Update.

It’s my honor to welcome you today. It’s unfortunate that we have to “meet” this way – via video conferencing. I would have preferred to see you face to face and shake your hands. That is not possible, however. These are not normal times.

We ended 2019 with great optimism about the future. We were hoping that the exuberance of the year would carry us through 2020 and bring more gains for the country.

It was in December 2019 when we learned that the official poverty incidence went down to 16.6 percent in 2018 from 23.3 percent three years before. We thought that with continuing reforms, poverty reduction will sustain improvements until the country becomes a middle-class society free of poverty by 2040.

Then a series of shocks early in 2020 came. We had earthquakes that hit a large part of Mindanao. Taal Volcano erupted. And the most devastating of all, the Covid-19 outbreak spread like wildfire throughout the world, wreaking havoc on all countries rich and poor.

We are still reeling from these events. We are half-way through 2020 but we know that these shocks have caused severe disruptions in manufacturing, agriculture, tourism, construction, trade and our whole way of life. The cumulative impact has been broad-based, steep, and deep, halting investment activity, and leading to the lowest consumption growth in three decades.

During these difficult times, strengthening the capacity of the health care system to control the outbreak while protecting poor and vulnerable households remains an urgent task for the country.

Similarly, financial support to affected firms, especially small and medium enterprises, to prevent job losses and bankruptcy, can help ensure that the recent shocks do not cause permanent damage to the country’s productive capacity and human capital.

As Rong Qian, our Senior Economist, will tell you later, we see the economy to contract in 2020 after many years of high growth in the Philippines. Economic growth prospects, however, can improve in succeeding years driven by a rebound in consumption, a stronger push in public investment, supportive fiscal and monetary policies, and the recovery of global growth.

We hope that in the next two years, we can get back on track to rapid growth underpinned by continuing reforms that yield bigger gains in poverty reduction and, with the right choices now, even greater sustainability and resilience.

Before I end, please allow me to highlight this important point.

If there’s one factor that gives the Philippines a good fighting chance against Covid-19, it is its strong macro-economic fundamentals built over long years of structural reforms.

The Philippines has abundant external reserve and the lowest public external debt in the East Asia and the Pacific Region. Also, the country has the highest reserve ratio in the region, indicating that monetary policy has plenty of room to inject liquidity into the system and perk up the economy.

Certainly, there are difficult challenges ahead. But if all the sectors work together, the country can overcome this challenge. The World Bank stands ready to contribute in this endeavor.

Once again, welcome to everyone. May we all have a fruitful discussion.

 

Press Release: Philippines: Social Assistance to Poor Households, Support for Small Enterprises Key to Broad-Based Recovery

Full Report: Philippines Economic Update June 2020, Braving the New Normal

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