BSP predicts first full-year economic contraction this year

The Philippine economy may contract on a full-year average basis for the first time in more than two decades, no thanks to the slump in activity caused by the global lockdown imposed by governments to fight the new coronavirus pandemic, the central bank said.

However, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno predicted that the country would experience a growth surge next year as activity was expected to pick up rapidly once COVID-19 is defeated.“Latest projections indicate that the economy is likely to contract this year, as extreme measures to contain the COVID-19 transmission in the country continue to affect domestic economic activity,” he said in a statement. “A contraction ranging from 1 percent to zero percent is forecast for 2020,” he added, predicting that the recovery would likely be U-shaped. “Thereafter, the economy is expected to bounce back to 7.8 percent growth in 2021.”The last time the Philippine economy contracted on a full-year basis was a 0.6-percent decline in 1998 as the country reeled from the effects of the East Asian financial crisis the previous year.

“As the pandemic has also nearly shut down major economies abroad, impact on tourism, foreign investments, trade and remittances from overseas Filipinos are foreseen,” Diokno said, adding that the Taal Volcano eruption and the ban on travel to and from the Philippines were also seen to impact on the Philippine economic growth engine adversely. INQ