PH’s growth story takes a beating as virus cases soar
With a still elevated number of COVID-19 infections in the Philippines, it would take some time to bring the gross domestic product (GDP) back to prepandemic levels, London-based Capital Economics said.
“[We] think the economy will contract by 8 percent this year, with GDP unlikely to return to its precrisis level until mid-2021,” Capital Economics senior Asia economist Gareth Leather said in a Sept. 4 report titled “Slow recovery in the Philippines, Taiwan-US FTA.”
“A long and strict lockdown meant the Philippines suffered one of the biggest falls in GDP in the region in the second quarter. The most recent data suggest that it is also experiencing one of the slowest recoveries,” Capital Economics added, referring to the record 16.5-percent contraction that slid the economy into a recession.
It noted unemployment rate still stood at 10 percent in July, that while an improvement from the 17.7-percent peak in April, it was still double the rate at the start of the year. It also stressed factory output was down 15 percent year-on-year in July, one of the weakest in the region.
“A renewed two-week lockdown in Manila in August and climbing infection rates are likely to have scuppered any improvements more recently,” Capital Economics added. A modified enhanced community quarantine was reimposed on Aug. 4 to 18 in Metro Manila and four neighboring provinces, which account for half of the entire economy.
The Philippines now has the biggest number of COVID-19 cases in Southeast Asia.
Last month, Capital Economics Asia economist Alex Holmes told the Inquirer that while the Philippines’ GDP would likely revert to its prepandemic level by the middle of next year, “the gap between output and its precrisis trend is still likely to be very large at that point, bearing in mind that the economy would probably have grown about 6.5 percent a year if the pandemic hadn’t hit.”
“We think GDP will be still around 5 to 6 percent smaller by the end of 2022 than if the coronavirus crisis hadn’t happened,” Holmes said. —BEN O. DE VERA INQ
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