Barcelona-based FocusEconomics has slashed its 2020 growth forecast for the Philippines to 1.4 percent as the COVID-19 pandemic and the local lockdown to fight the disease deeply hurt the economy.
In an April 28 report, FocusEconomics said the lockdown “has brought large portions of the economy to a standstill.”
“The economic scenario for the first half has deteriorated considerably,” it said. “Available data highlight the sharp downturn,” it added.
It cited manufacturing PMI, or purchasing manager’s index, plunging to a series low in March, business sentiment hitting record low, merchandise import collapsing in February and exports slowing in the same month.
“Stringent measures and subsequent decline in household income will also hammer consumer spending,” the report said. “Flagging global trade will further curb demand for Filipino goods,” it said.
It did not help that foreign tourist arrivals dropped by more than 40 percent last February, while “cash remittances—a key source of external financing—will likely decline in the coming months,” FocusEconomics said.
FocusEconomics had projected Philippine GDP growth at 5.2 percent previously.
“The economic fallout is set to upend eight years of above 6-percent growth,” the think tank said.
“The deteriorating labor market, weaker remittances and depressed sentiment will drag on consumer spending,” it said.
“Investment is poised to decline amid suspended infrastructure projects,” it added.
The Philippines needed to embark on an “aggressive fiscal and monetary stimulus” to turn back the slowdown, FocusEconomics said.
The Philippines’ economic managers had projected GDP to post zero growth or contract by 0.8-1 percent this year.