Govt lowers Q1 growth rate to -0.7%

The country’s gross domestic product (GDP) growth rate for the first quarter of 2020 was revised downward to -0.7 percent from -0.2 percent, according to the Philippine Statistics Authority (PSA).

In a report on Wednesday, the statistics agency said it revised “the GDP estimates based on an approved revision policy [that] is consistent with international standard practices on national accounts revision.”

It added that the growth rates of net primary income from the rest of the world and gross national income were also lowered from -4.4 percent to -5.9 percent and from -0.6 percent to -1.2 percent, respectively.

The combined effects of the eruption of Taal Volcano in mid-January, the coronavirus disease 2019 (Covid-19) pandemic and the community quarantines the government imposed to contain the illness’ spread were blamed for the January-to-March contraction.

The PSA is set to release the official second-quarter GDP growth data today, August 6.

IHS Markit Asia-Pacific chief economist Rajiv Biswas said the Philippine economy was expected to have shrunk further in the second quarter by around 6 percent year-on-year.

“This sharp fall reflects the impact of the Covid-19 pandemic and [the] resulting severe lockdowns and travel bans, which hit industrial output and consumer expenditure hard. With Q1 (first quarter) 2020 GDP having already contracted, the Philippines economy will experience a recession this year, with annual GDP for 2020 forecast to contract by around 3 percent year-on-year,” he told The Manila Times.

According to Biswas, the easing of lockdown restrictions since June would help economic growth to gradually improve in the third and fourth quarters.

“The IHS Markit Philippines Manufacturing PMI (Purchasing Managers’ Index) already rebounded strongly in June, rising from 40.1 in May to 49.7 in June, signaling the stabilization of manufacturing output. Domestic industrial production and consumer spending is expected to gradually improve during H2 (second half of) 2020, albeit constrained by the continued rise of new Covid-19 cases in the Philippines during July,” he said.

“However, GDP growth in 2021 is expected to rebound strongly as the pandemic is expected to end, with GDP growth rising by 7.5 percent year-on-year as domestic demand strengthens and global export orders rebound,” the economist added.

“The Philippine government and [the] BSP (Bangko Sentral ng Pilipinas) have already taken significant fiscal and monetary policy stimulus measures to try to support growth. During H2 2020, ongoing support for low-income households, as well as for SMEs (small and medium enterprises), will be important to help them to get through the remaining months of the pandemic. With a number of vaccines now in final stages of clinical trials, there are improving prospects that the pandemic can be brought under control.”

Source: TheManila Times