Barcelona-based FocusEconomics further downgraded its economic outlook for the Philippines, with gross domestic product (GDP) projected to shrink by 2.3 percent this year.
“After eight years of above 6-percent growth, the economy is seen contracting this year. Disruptions from COVID-19 containment measures, evaporated tourism and plunging remittances will all pummel GDP,” FocusEconomics said in its Philippines Economic Outlook report dated May 26.
In April, FocusEconomics slashed its 2020 growth forecast for the Philippines to 1.4 percent from 5.2 percent in March.
It said that while higher government spending and investment should provide some relief, private investment was seen falling on soft demand and high uncertainty. “FocusEconomics panelists see GDP falling 2.3 percent in 2020, which is down 3.7 percentage points from last month’s forecast.”
After a surprise 0.2-percent GDP contraction in the first quarter, FocusEconomics said the economy was expected to have worsened in the second quarter due to the lockdown and a sudden downturn in the global economy.
“The manufacturing PMI hit a new record low in April on plummeting production, new orders and exports, while tourism plunged over 50 percent in January to April,” it noted, referring to the purchasing managers’ index.
“In addition, the government stated in May that around 42,000 overseas Filipino workers were set to return in May and June, joining the over 27,000 who have already returned as economic fallout from COVID-19 disrupts jobs overseas. This will likely see remittances—an economic lifeline for the country—plunge in the second quarter and possibly beyond,” FocusEconomics added.
FocusEconomics nonetheless expects the Philippine economy to recover next year and post 7.5-percent expansion. —BEN O. DE VERA INQ