The Philippines was expecting its economy to slump further in the second half of the year as the government’s quarantine measures continued to take a toll on businesses.
According to a report by The Philippine Star, the Bangko Sentral ng Pilipinas (BSP) the country’s gross domestic product (GDP) was projected to contract between 5.7 percent and 6.7 percent as a result of the full impact of the tight lockdown to keep the virus outbreak at bay.
“The negative impact of the COVID-19 (coronavirus disease-19) crisis is harsher than what was originally thought,” BSP Governor Benjamin Diokno was quoted as saying in a report by The Philippine Star.
Two more quarters of GDP contraction would put the Philippine economy into recession.
In mid-March this year, President Rodrigo Duterte ordered the imposition of an enhanced community quarantine (ECQ) on Metro Manila amid the rapid increase in virus infections, before widening the lockdown on the entire Luzon.
The quarantine measures have prompted most businesses to temporarily shut, and driven most people to stay and work from home. Public transportation was also suspended to severely limit the movement of people.
Metro Manila and the entire Luzon region account for more than half of the Philippines’ total population and generate over two-thirds of the country’s overall GDP.
Economic managers were expecting the Philippine GDP to contract by 3.4 percent this year as compared with a 6-percent growth last year. This would end over 20 years of growth since GDP last contracted by 0.5 percent in 1998 during the Asian financial crisis.
On Friday, S&P Global Ratings said that it forecasted the Philippine economy to further contract by 3 percent as compared with the 0.2 percent projected previously.
Diokno said that the projection fell within the government’s revised projection that the economy will contract between two and 3.4 percent, but should be taken positively as it was better than the revised forecasts of other multilateral.
The International Monetary Fund (IMF), on the other hand, downgraded its Philippine GDP forecast to a 3.6 percent contraction as opposed to a 0.6-percent growth this year.
The IMF said this was supported by expectations that the global economy will shrink by 4.9 percent instead of three percent.
Meanwhile, the Asian Development Bank (ADB) was looking at a contraction of 3.8 percent for the Philippine economy instead of a two-percent expansion as growth across the Asia Pacific was expected to fall to a 59-year low.
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