For the first time in two decades, the Philippine economy shrank amid Taal eruption, decline in tourist arrivals, and the ongoing enhanced community quarantine brought about by COVID-19 pandemic.
The Philippine Statistics Authority disclosed the first quarter Gross Domestic Product (GDP) or the value of products and services made within the country fell by 0.2 percent. The country’s GDP has registered a 6.7 percent growth in the fourth quarter of 2019, and 5.7 percent in the first quarter of the same year.
Of the top three industries, only the services sector which covers BPOs went into the positive territory.
The National Economic and Development Authority (NEDA) explained the result of GDP in the next quarter may even be worse due to the extension of the lockdown this month. “Philippine GDP for 2020 could range -2% to -4% (would still be a function on how long the lockdowns last) but still better with less contraction compared to other Asian (around -5% to -10%) and other developed countries around the world (around -10% to -15% estimated in some big European countries).
Thus, the risk of recession is now looming locally and globally,” RCBC Chief Economist Michael Ricafort said.
NEDA Acting Secretary Karl Chua pointed out that structural reforms are needed for the economy to bounce back, “We are hoping that with mega swabbing, the 30k test per day, we can start to reverse the economic trajectory by June so that by the second half of the year we can fully recover.”
Finance Secretary Carlos Dominguez III explained the government has a strategy in handling debt that aids in boosting investor confidence in the country “at this time when the government needs international support to finance Covid-19 response and lead the country to post-pandemic recovery.”
Meanwhile, Malacaῆang expects a “big contraction, but the economic planners are very vigilant” and it foresees a “V-shape of economic recovery.”
“There will be a strict decline in the GDP for the second quarter perhaps but we expect a strong rebound, courtesy of the Build, Build, Build program of the government and number 1 very prudent fiscal policy, as well as prudent monetary policy,” Presidential Spokesperson Harry Roque enthused. – Report from Naomi Tiburcio
