Fitch Solutions cuts 2020 PH growth forecast to 4%

The Philippine economy may see the most sluggish pace of growth in nine years this 2020 due to economic shocks from the COVID-19 pandemic, think tank Fitch Solutions said.

Fitch Solutions slashed its gross domestic product (GDP) outlook for the Philippines by a hefty 2 percentage points to 4 percent from its earlier outlook of 6 percent.

The research firm also downgraded its 2020 GDP forecasts for many other major economies. It now sees France, Brazil, Spain, Greeze, Russia and South Africa heading into economic recession, while Japan and Mexico may see a worse economic contraction.

For the Philippines, the new forecast marks a sharp decline from the 5.9 percent pace of GDP growth seen last year and the over 6-percent trend growth rate seen in the last decade.

In a research note Fitch Solutions e Philippines economy would suffer from the COVID-19
outbreak impact through the four channels of tourism, remittances, supply-chain disruption and weakening foreign direct investment inflows.

“While these transmissions channels are still in place, we now believe that the most
significant drag on growth will come from quarantine measures in the country following a severe outbreak,” Fitch Solutions said.

“Moreover, our outlook for the global economy has become more pessimistic, we now expect a sharper downturn, exacerbated by the tightening of global financing conditions. The combination of these headwinds will cap domestic demand and investment, as well as export activity over the coming quarters.”

However, Fitch Solutions said fiscal stimulus would play a large role in supporting the economy and a pipeline of public infrastructure projects would help support a rebound, once the outbreak was contained.