The regional economic think tank Asean+3 Macroeconomic and Research Office (Amro) has cut its 2020 growth forecast for the Philippines to 4.5 percent as the entire region reels from the economic fallout of the COVID-19 pandemic.
Across Asean+3, including Asian economic powerhouses China, Japan and South Korea, regional growth was seen to drop to 2 percent in 2020 from 4.8 percent in 2019.
Hoe Ee Khor, Amro chief economist, said in a statement on Tuesday (April 7) that tension in the Middle East between the United States and Iran blew dark clouds into the economic horizon “just as we were closing the 2019 chapter on a brighter note” with an initial trade agreement between the US and China.
“No sooner had this subsided, the ‘black swan’ COVID-19 virus broke out in China and turned into a global pandemic,” said Khor.
“Europe and the United States are expected to go into recession just as the outbreak subsides in China and [South] Korea,” Khor said.
This would weaken China’s economic recovery at 3.5 percent in 2020 from 6.1 percent in 2019, Khor added.
Khor said Asean countries with a surge in COVID-19 infections had resorted to “very strict measures” that included lockdowns and “large stimulus packages to support their economies.”
As a result, Amro expects sharp declines in growth in the 10-member Association of Southeast Asian Nations (Asean) to 1.1 percent in 2020 from 4.6 percent in 2019.
In the case of the Philippines, Amro’s forecast, taking into consideration the ongoing pandemic, is within the 4 to 5 percent range, below the government’s 6.5 to 7.5 percent target.
Last March, Amro forecast the Philippines’ GDP expansion for 2020 at a faster 6.2 percent, but this rosier projection had been overtaken by the spread of the COVID-19, wreaking havoc on economies worldwide.
In Amro’s Asean+3 Regional Economic Outlook (Areo) 2020 report which incorporated economic developments before March 16, it noted that during the short term, “the main risks facing the [Philippine] economy stem from external sources.”
During the live-streamed launch of the Areo 2020 report also on Tuesday, Khor said that the Philippines was among the Asean+3 economies whose tourism revenues will be badly hit by the COVID-19 pandemic, as the sector accounted for about a fourth of domestic GDP.