Economic recovery in the near term will be slow—one that will chart the U-shape—as the country reels from the impact of the lockdown during the second quarter that rendered jobless over a fifth of the labor force in Luzon and may have pushed “five million Filipinos below the poverty line,” according to the Asian Development Bank’s (ADB) Philippine office.
In a presentation before European business chambers last week, Kelly Bird, country director of the ADB’s Philippines country office, said they projected gross domestic product (GDP) to shrink by 2.3-5.3 percent this year, gloomier than the government’s 2-3.4 percent forecast.
Bird said “data on tax revenue collections in the first half of 2020 implies the economy could contract by more,” even as “worse is most likely over now with the gradual opening of the economy,” referring to the eased restrictions under general community quarantine that allowed three-fourths of economic activities to resume with minimum health standards starting June.
The country began with a hard lockdown in mid-March, with only essential businesses open, to stem the spread of the new coronavirus which causes COVID-19.
Citing latest economic indicators such as cement and vehicle sales, merchandise exports and imports and the purchasing manager’s index, Bird said “contraction could have bottomed out” in May.
But citing analysis by the ADB’s Philippine country office, Bird said the unemployment rate in Luzon—which, alongside other parts of the country with high COVID-19 cases, had been placed under enhanced community quarantine (ECQ) until May—would have peaked to about 22 percent in the second quarter.
Metro Manila and neighboring regions accounted for two-thirds of the country’s total output.
The Philippine Statistics Authority’s April labor force survey placed the national unemployment rate at a 15-year high of 17.7 percent, equivalent to 7.3-million jobless Filipinos nationwide during the first full month of ECQ.
As such, Bird said “recovery could be fragile and a protracted U-shape in 2020 to 2021.”
“Some sectors will take longer to recover—‘high contact’ sectors like tourism, segments of retail and services, private education providers, etc.,” Bird noted.
He was nonetheless optimistic that GDP would rebound by 6.5 percent next year.
According to Bird, the Philippines was already “scaling up its health response” to fight the crisis. ADB would continue to extend financial assistance to its host-country through loans and grants, he added.
Bird said the ADB was processing two more COVID-19-related assistance for the Philippines, including an upcoming $500-million disaster resilience improvement program loan. The ADB would also extend to the Philippines a $125-million HEAL health-care project, which would provide additional labs, medical equipment and supplies. INQ