Malacañang on Thursday said the imposition of strict community quarantines caused the historic decline in the country’s gross domestic product (GDP) at a rate unforeseen by government economists.

The country’s economy in the second quarter of 2020 shrank by 16.5 percent — the largest drop ever recorded by the Philippine Statistics Authority (PSA) since the 1981 series. According to the PSA, the main contributors to the decline were manufacturing (-21.3 percent), construction (-33.5 percent) and transportation and storage (-59.2 percent).

“[These] sectors… were greatly affected by our strict lockdown. We expect an improvement in the performance of these sectors during the second semester of the year, with our gradual reopening of the economy, as well as our proposed stimulus measures,” Palace spokesman Harry Roque said in a statement.

Roque said the “Bayanihan 2” fiscal stimulus bill, which has passed second reading in the House of Representatives, was needed to boost the second semester economic performance and help businesses recover.

The Bayanihan 1 stimulus law granted President Rodrigo Duterte 30 special powers, including the realignment of the national budget and the grant of cash aids through social amelioration programs and a special risk allowance for health workers. It also required corporations to prioritize manufacturing of materials and provision of services needed amid the crisis.

Earlier this month, Duterte approved the P4.506-trillion national budget proposal for 2021, almost 10 percent higher than the 2020 budget. 

Roque said the government had put together a “phased and adaptive economic recovery program” called PH-Progreso or the Philippine Program for Recovery with Equity and Solidarity, to cushion the Covid-19 pandemic’s effect on business and livelihood.

The 2021 national budget was also recalibrated and “Build, Build, Build” programs were restarted to create jobs, he said.

Majority of the country has been under general community quarantine since June, which has allowed for the reopening of more businesses and establishments.

However, due to medical workers’ call for a “time-out,” President Duterte reimposed the modified enhanced community quarantine in Metro Manila and nearby areas on Aug. 4. John Ezekiel J. Hirro