PH GDP seen shrinking by over 7% in 2020

by Ben O. de Vera, Philippine Daily Inquirer, 24 Sep 2020

MANILA, Philippines — The Philippines’ gross domestic product (GDP) is expected to fall at its worst rate in at least 36 years, no thanks to the COVID-19 pandemic’s debilitating impact on the domestic as well as global economies.

The regional macroeconomic surveillance organization Asean+3 Macroeconomic and Research Office (Amro) on Thursday said it revised its GDP outlook for the Philippines to negative 7.6 percent in September from minus 6.6 percent last August.

Amro’s updated projection was a faster contraction than the government’s estimate of 4.5-6.6 percent.

It will also be a bigger GDP decline than the 7-percent drop posted in 1984, at the height of a debt crisis during the waning years of the Marcos dictatorship.

“The downgrade of growth forecast for 2020 mainly reflects the impact from the reimposition of the lockdown measures since early August. Going forward, the trajectory and pace of the recovery will hinge on the development of the COVID-19 pandemic, the recovery of the global economy, and policy responses,” Amro country economist for the Philippines Zhiwen Jiao said, referring to the two-week modified enhanced community quarantine (MECQ) imposed in Metro Manila and four neighboring provinces accounting for half of the economy last month when COVID-19 cases rose after economic activities gradually opened up since June.

For 2021, Amro slightly raised its growth projection for the Philippines to 6.6 percent from 6.5 percent last month.

In a Sept. 22 report, Barcelona-based FocusEconomics also downgraded its GDP forecast for the Philippines to negative 7 percent from minus 6.1 percent previously.

“The economy will take a severe hit this year due to the strict domestic lockdown, weaker remittances, and vanishing foreign demand. Supportive fiscal and monetary policy stances should cushion the fallout somewhat, however, and help the economy to rebound significantly in 2021,” FocusEconomics said.

FocusEconomics nonetheless revised its 2021 growth projection slightly downward to 7.3 percent from 7.5 percent in August.

For FocusEconomics, “further lockdown measures to contain rising coronavirus cases pose a key downside risk.”

Citing the latest economic data, FocusEconomics said the recovery momentum “remains muted in the third quarter following the unprecedented blow dealt to the economy in the second quarter by a severe domestic lockdown, which was only partially cushioned by soaring government spending.”

Also this month, the Manila-based multilateral lender Asian Development Bank (ADB) projected the Philippines’ GDP to slide by 7.3 percent in 2020.