In April-June, the economy shrank by 16.5 per cent compared to last year, said Thursday the Philippine Statistics Authority.
This captures two full months of Luzon under lockdown, particularly in Metro Manila. Metro Manila then serves as the main business hub for the nation.
This also follows a 0.7 percent contraction in the first quarter — which was deeper than what was initially reported — and confirms that the Philippines is in recession amid the global health crisis due to the lockdowns.
The fall is also the steepest since records became available in 1981 during the Marcos era’s last few years. In addition, reverses the rise of 5.4 percent recorded in the second quarter of 2019. After this, in the third quarter of 1984, the lowest result was a 10.7 per cent slide.
National Statistician Dennis Mapa said in a report.
The economy crashed by 9 per cent in the first half of the year. Finance Secretary Carlos Dominguez III said separately in the briefing that if the government did not raise investment, the recession would have been worse. Then, it will happen for the semester at 11.5 per cent.
Government spending was the only segment which substantially grew year-on-year. Household consumption – the backbone of the economy – emerged as the biggest dampener as lockdowns kept people at home and spent less.
The steep decline in domestic activity forced President Rodrigo Duterte’s economic team to revise their forecast for the full year 2020 to a 5.5 percent contraction, wider than the 2.0-3.4 percent drop they projected back in May.
The economic team anticipates the passing of the ₱140-billion Bayanihan to Recover as One Operation. In addition, it would help improve economic development. And also, assist the worst-hit industries, which in turn will lead to a 2021 growth rebound.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said separately that “the worst is behind us,” with the economic results in the last two quarters of the year being seen as stronger. For 2021 and 2022 the team sees a recovery to a growth of 6.5-7.5.
For his part, Bank of the Philippine Islands lead economist Jun Neri said the country’s economy might have already experienced its worst as it transitions to the new normal.
“We are quite hopeful that we have already hit bottom. The reason for this is we have learned things about the treatment, how to improve the transport system, as well as technology.”