The Organization for Economic Cooperation and Development (OECD), a group of developed countries, expects the Philippine economy to contract by a record 8.4 percent this year amid the COVID-19 pandemic.
The OECD’s latest gross domestic product (GDP) forecast for the Philippines, contained in its Economic Outlook for Southeast Asia, China and India 2020 November Update report released Friday, was a bigger fall compared to the 3.2-percent GDP contraction projected in July.
The OECD forecast would exceed the 7-percent drop in GDP in 1984, during the waning years of the Marcos dictatorship that was aggravated by a debt crisis.
The government reported on Tuesday that GDP shrank 11.5 percent year-on-year during the third quarter, bringing the end-September average to a 10-percent decline.
The OECD noted that the restrictions to contain the pandemic, including lockdowns, “add to the ongoing pressure on private consumption and investment spending.”
It did not help that the government was borrowing more for COVID-19 response, which the OECD said “put additional strain on the government’s ability to service debt on existing infrastructure projects and could jeopardize investment into future projects.”
But the OECD sees the Philippines resuming its growth path next year with a 6.2-percent expansion, “assuming the economy starts to recover toward the end of the year, in part supported by the government’s pledge to accelerate public infrastructure investment.”
The OECD’s 2021 growth forecast for the Philippines was below the government’s target range of 6.5 to 7.5 percent.
Economic managers have said the worst was over for the economy as the gradual lifting of quarantine measures allowed GDP to grow 8 percent quarter-on-quarter during the July-to-September period from its second-quarter trough.
In the Association of Southeast Asian Nations, the Philippines’ estimated GDP contraction this year was the biggest, exceeding the declines of 8.2 percent in Thailand, 6.9 percent in Malaysia, 5.5 percent in Singapore, 3.4 percent in Cambodia and 3.3 percent in Indonesia.
On the other hand, four Asean countries were expected to grow this year: Myanmar (1.7 percent), Vietnam (1.5 percent), Brunei Darussalam (1.4 percent) and Laos (1 percent).
China’s economy was projected to grow by 1.8 percent this year, while India’s GDP was forecast to shrink by 10.2 percent. —Ben O. de Vera