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The Philippine Economic Position prior to COVID19 Pandemic Once the corona viruses pandemic is mitigated, the new normal shall be marked by slow  growth, most will be assessing and restructuring their financial standings, repayment of  financial obligations and liquidity shall be every ones priority. Banks and financial  institutions flooded by loans and real estate mortgages were expected thereafter.  Furthermore, health security consciousness, risk of deflation and/or inflation of  commodities, the distrust of equities and investments were likely to happen and  ingratiated the slow growth. After taking the initial beating from the COVID19 pandemic  that transmuted into health crisis; restricted social mobility and economic fallouts from  imposed mitigations.   The Philippine economy suffers from  financial a shock that shrinks its GDP  by 0.2% in the first quarter of 2020.  The highest contraction in more than  two decades, surpassing two  economic crises; Asian Financial crisis  1998 and 2008 collapsed of derivative  CDO (collateralize debt obligation)  also known as the Sub-prime  Mortgage collapsed that triggered the  global financial crisis. Subsequently,  the New York based Fitch rating  lowered the Philippine credit rating  from investment grade (BBB+) to  stable (BBB). Initially during Pre-  pandemic the International Monetary  Fund had a high hopes for the  Philippine economy to reach 6.3%,  but may enough be lucky to have the  upper bound projection of 2% (ADB), as the pandemic looms, since the ASEAN 5 average  GDP projection was only -0.6% by IMF. Fitch states the downgrade reflects the  deterioration in the country short term macro economic and fiscal outlook as result of  country's pandemic mitigations. But, does the Philippines prepared for the subsequent long  term impact of COVID19 in the Real estate Industry and economy?   Bangko Sentral ng Pilipinas Governor Benhamin Diokno said "Structural reforms and sound  economic management over the years have provided us with monetary and fiscal space to  safeguard lives and support livelihoods at this critical time". The last decade was slow but  steady and interrupted economic growth in the Philippines, with controlled inflation and  rising employment. The economic progress was supported visually by the distinctive  attribution to the Metropolitans Skylines. Fundamentally, the Philippine real estate market,  was at the end of economic cycle before the pandemic devastates the economy and is due  for a healthy corrections in-symmetry with its regional neighbours. These are our insights  at the start of the period of New Business period in 2020, when the clock starts while the  country is building resilience to adapt the new normal in the midst of the pandemic.  Real Estate, Financial market and Industries Implications from COVID19 The Real estate Industry before the start of the 1st quarter 2020 is marked by strong  growth for most segments, supported by gradual increase of supply and strong demand  (as indicated in by the Real Estate price index),but are at peril from contraction or slow  growth in the coming months; demands are expected to plunges in short term but would  bounce and would steadily increase in the long run, the prices will stabilize more or less at  its current value.  Rental units vacancy were expected to rise and vacancy rates are  anticipated to stabilize or discounted in a short term till the last quarter except for  residential in urban vicinities., As  mentioned earlier the liquidity is  a prime objectives after  community quarantine most  individuals and businesses  strained from financial stress  shall dispose the more saleable,  tangible, none performing assets  and secondary properties that are  viable for disposition. And thence,  post-GCQ is the best time to  acquire land and distress  properties for real property  bankers and investors. At the restart of the economy, most of the industries from small to large enterprises will  start to re-evaluate their financial standings. New loans and mortgages will overwhelm  banks, financial restructuring, and merging, corporate downsizing and buy outs were likely  depending on the duration of the pandemic and its aftermaths. And the effect on  employment won't be spared. These valuable insights show how the markets behave from  the after-effect of the past financial crises. However, the severity of the present crisis will  determine on the magnitude of damage, the longevity and government counter measures  until it is contained.  The collapsed of world’s oil and energy consumption, was severely affected by the  transportation, retails, and hospitality & tourism sector’s were force arrest by governments  imposed policies. The inactivity of tourism wobbles the pillar industries like bowling pins.  The crippled inflows of foreign portfolio investment as well as foreign direct investments  (FDI) has triggered the PSE index to collapse, from 7000s to 4000 level, a 40% one month  abrupt drop in mid-march to  April, simultaneously, followed by  the halting of inflows of  investments from China and  Middle East. This contributes to  the downward pressure on real  estate industry, especially on  residential and office segments.  Before COVID19 pandemic, Real  estate indicators shows the  Philippine real estate market is at  the apex of the price curve; an  uninterrupted growth closed to  10 years., crisis or no crisis the real estate market is due for a healthy correction. And  these have already been anticipated and embattled by well-established companies, how to  sail and navigate the storm. The unprecedented effect of the COVID19 pandemic that  originated from China is not only regional scale but global. The disruption in the country's  key pillar industries consequently wont spare the country mid to long term real estate  prospects for growth, especially when the bigger slice of the Philippine GDP derives its  earnings from the external global market, hence, from sectors export services and  business process outsourcing.  Typically, The first quarter the year is preferred by contractors as the foremost period to  start construction and development because of the fair weather condition, construction  materials usually starts to appreciate during these months, A seasoned real estate  practitioner knew, the first and the last quarter of the year is the best time to buy lease  and sell properties. But this year's specifically March, April, and May, real state transaction  drops to almost zero sale. Real estate blogs, social media's seller's chat groups  conversations tells the story and validated by nation wide directives such as travel  restriction, border closures, community quarantines to lock-downs in most part of the  metropolitans down to smaller cluster communities, It limits economic activities like selling  and buying. This National policy immobilized 59.7% of the total Philippine working  population (Philippine Labor Statistics Study 2017) or 60 million populations from being  productive, (more than half of the total Philippine population) since the middle of March till  May. These translate also to more than 50% of the total businesses closure of mostly small  and medium enterprises that constitute of the country's 99.6 percent of the total private  sectors that contributes to 63% of the total country’s labor force. Thus, the government  creates a policy atmosphere which discourage private sector to operate while battling the  pandemic and reinforcing its health system, this overturn doctrines and philosophy learned  in economics, which is necessary in the short term.   Business and employment growth signifies a healthy economy. Manpower is crucial to  growth and is integral part of the business sector consequently; manpower correlates on a  production that plays the main part of the supply chains of commodities. And therefore  fuels the engines of growth that contributes to the Gross Domestic Product; Industrial  commodities e.g. Power and Mining, Services e.g. BPO, POGO, Remittance, Agriculture,  and Tourism.  Resilience of the Philippine Economy, Fiscal Position amidst COVID19 Late last year, the Philippines was on the highest peak of economic progress. As the  country’s economy was awarded its first (BBB+) credit rating by Fitch, after the two rating  agencies; S&P and Moody's precede in awarding its first investment grade. Despite the  shocks experience at the beginning of the year cause by Taal Volcano eruptions, the  country's resilience on natural calamities cushions the collateral effect on the country's  2/3s GDP (Luzon). The countries  Build, Build, Build program  positive economic impact did  such prestigious financial grade,  elevating the country's  prospects to positive outlook.  More development projects were  on the pipelines as the country  is addressing its infrastructure  gap; lessen poverty, embracing  the sustainable development  mechanism; enforcing its  position as one of the Asia's  emerging economies. As the  economic barometers shows more positive signs, including the latest OFWs remittance  strong contribution. (in first 2 months by 4.6% increase from the previous year).   The Philippine GDP contracts 0.2%, in the first quarter of the year after COVID19  pandemic decimated global demand; impedes economic activities and disrupt supply  chains. More indicators points to downward trend as merchandise trade figures from April  starts to show up particularly by the collapse of oil prices in the world market.   The Philippine has one of the highest financial strength amongst emerging economies in  the world according to the London based publication, “Economist”, with the lowest external  debt in ASEAN of 72.3 Billion Dollar, second to Indonesia and with the Debt to GDP ratio of  0.46 or 46%. The 275 billion pesos stimulus to counteract the initial effect of COVID19  pandemic would result into 0.494 debts to GDP ratio or 0.034 increase. Assuming no  financial external aid cometh; a trillion pesos total budget the total amount as initially  recommended by National Economic Development Authority (NEDA) from the early period  of the pandemic escalations result to (d/GDP) Debt to GDP ratio of 0.587 or 58.7% of the  Total Gross Domestic Product. This is still healthy as compare to Singapore with the debt  to GDP of 110% and the US with 108%. The Philippine foreign debt is 33% and 67%  domestic. This suggests that the Philippines own most of its debt and have a lot of leeway  in securing funds to finance the pandemic damages and future investments on  infrastructure projects. Philippine Economic Strategy The government will have to forego any growth targets, and will need to borrow funds to  augment its financial capacity. Similarly, it will need to relax its deficit target to allow for  greater deficit spending. However, the impact of the pandemic is expected to persist in the  long-term, with a long period of recessions on global scale. To this end, the Philippine  government will need to implement a debt-financed economic growth strategy over the  next 2 or 3 years. Within that period, the productivity that is expected from the proposed  structural transition will be forthcoming.   In 2019 the Philippines has a fiscal deficit expenditures exceed revenue by 660.2 Billion  Pesos up 18.3% from 558.3 Billion gap recorded 2018 according to bureau of treasury. The  deficit was equivalent to 3.55% of GDP in 2019-overshooting the 3.25% target of the year.  Economic managers estimated that the fiscal deficit in 2020 may widen to as much as  5.3% of the Gross Domestic Product. But inflation projection is expected to kick-in at only  2.2% in 2020 and 2.4% in 2021 as reported by ADB, within the tolerable range of 2% to  4%. The Philippine solid banking sector and high foreign exchange reserves (high  exchange rate) supports the country solid fiscal position, for the Philippine is more a net  importer than exporter a sign that the country has a solid domestic demand, a consumer’s  economy which is sustainable inclusive growth.  Conclusion The Philippine development plans has been derailed by COVID19 Pandemic but the  country’s existing infrastructure development projects through the administration's flagship  Build, Build, Build, program will play the key rule in the country's economic recovery with  adjustments for more Public Private Partnership arrangements especially on “Agriculture” -  the backbone of the economy in the 70 and 80s, To sustain inclusive growth, promote and  solicits for public infrastructure, entice private sectors to participate. In turn, minimizing  the country's external debt ratio, thus regaining lost growth in post-COVID19 and back to  its economic tract. With the latest upgrade from BBB+ to A by the Japan Credit Agency  and the forecast growth greater than 6% for the country by 2021 by the Asian  Development Bank (ADB). These validate the credence for a fast and strong economic  recovery. However, the government should tackle first its health system gap and embarks  on a long term strategies, amend development plans as we leapfrog towards towards  digital economy and grapple with all the scenarios including the worst effect of the  pandemic. 

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