PH economy shrinks 16.5% in Q2 amid pandemic

PH economy shrinks 16.5% in Q2 amid pandemic

MANILA – The Philippine economy contracted at a record pace of 16.5 percent in the second quarter of 2020 due to the impact of the coronavirus disease 2019 (Covid-19) pandemic, but sees signs of recovery.

The government reported Thursday the country’s gross domestic product (GDP) declined by 9 percent in the first semester, as household consumption and private sector investment significantly dropped given the closure of businesses and the loss of income during the enhanced community quarantine (ECQ).

“…A month of lockdown in the second quarter because of ECQ affected us by almost PHP1.5 trillion so that is one way to look at it,” said Acting Socioeconomic Planning Secretary Karl Kendrick Chua in a joint Development Budget Coordination Committee (DBCC) press conference.

The ECQ was implemented in Luzon from March 17 to May 15, while it was extended until the end of May for the National Capital Region.

In a separate press briefing, Philippine Statistics Authority (PSA) Undersecretary and national statistician Dennis Mapa said the GDP growth rate in April to June period is the lowest recorded quarterly growth since the 1980s.

Mapa said the last time the economy had negative growth happened in the third quarter of 1984 and first quarter of 1985.

Among the major economic industries, the agriculture, forestry and fishing sector posted a growth of 1.6 percent in the second quarter of 2020.

Chua attributed the slight growth of the sector to the 7.2-percent increase in rice production as implementation of the Rice Competitiveness Enhancement Fund under the Rice Tariffication Law is accelerated.

However, industry and services saw their largest contraction in decades at 22.9 percent and 15.8 percent, respectively, in the same period.

“While the decline in GDP is huge, we are beginning to see signs of recovery,” he said, citing the manufacturing production, exports, and imports which have taken a U-turn as the pace of decline slows.

Chua, also acting Director-General of the National Economic and Development Authority (NEDA), said reverting back to modified ECQ may be a “one step back” for the country’s economic recovery, but the government remains committed to addressing immediate challenges while focusing on medium-and long-term goals.

The MECQ was re-imposed in Metro Manila, Cavite, Laguna, Bulacan, and Rizal from August 4 to 18 amid the rising Covid-19 cases.

“When needed, we will have to take one step back and when the virus is contained, then we will proceed with more relaxed quarantine measures. And our Build, Build, Build program, our Bayanihan 2 which we hope could get passed soon, and our upcoming 2021 budget are the instruments to ensure that we recover as soon as possible,” he added.

The House of Representatives on Wednesday passed on second reading Bayanihan 2 providing for the country’s response and recovery interventions for Covid-19 pandemic.

Chua said the administration has also quickly resumed the infrastructure program when it was safe to do so after a total ban during the start of the ECQ.

“Around 264 projects implemented by DPWH (Department of Public Works and Highways), DOTr (Department of Transportation), and BCDA (Bases Conversion and Development Authority) have resumed starting June 2020 at an accelerated pace,” he said. (PNA)

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