Some analysts are saying that the economic and financial impact of the COVID-19 pandemic will be worse than the 2008-2009 global financial crisis (GFC). If we are going to take their initial assessments seriously, then, the response to this pandemic should be stronger and the scope bigger.

Tables 1 describes the fiscal, monetary and macro-financial policies employed during the 2008-2009 GFC, while Table 2 outlines the current policies to support economic growth amidst the Covid-19 pandemic. The GFC hit the Philippines and resulted to a decline in GDP growth, settling at 4.2% in 2008 and a low of 1.1% in 2009. Pre-GFC economic growth was at 6.6% in 2007, and the real economy eventually rebounded to 7.6% in 2010. Fast forwarding to a decade later and GDP growth was at 6.2% in 2018 and a 5.9% in 2019.

Table 3 describes the pre-crisis years, i.e., 2007 for the GFC and 2019 for the Covid-19 pandemic. It uses the economic measures recently used by the National Economic Development Authority (NEDA) in its article* to project the impact of COVID-19 on the Philippine economy. Clearly, the Philippine economy in 2007 is not the same as the Philippine economy in 2019. Apart from the trade’s bigger part of the economy, tourism has more than doubled in terms of GDP contribution. Aggregate consumption, the biggest contributor to GDP, and remittance inflows has continuously supported economic growth in more than a decade. An estimated deeper impact of the COVID-19 pandemic on the bigger real macroeconomy, compared to the economic losses caused by the GFC, warrants wider and more encompassing policies. By mere optics, the current crop of policies may have to be augmented further and a more targeted policy support is very much needed.

Also read: 4 preventive measures to reduce the impact of COVID-19 on your business

Article by: Ruben Carlo Asuncion

Source:
*NEDA (19 March 2020). Addressing the Social and Economic Impact of the Covid-19 Pandemic.

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