Philippine economy shrinks in Q1, first in 22 years
The Philippine economy contracted by 0.2 percent during the first quarter of this year, the lowest since 1998, the Philippine Statistics Authority said on Thursday.
Acting Socioeconomic Planning Secretary Karl Kendrick Chua attributed the contraction of the gross domestic product from January to March to "unexpected" socio-economic risks and shocks, such as the Taal volcano eruption in January; a significant decline in tourism and trade starting February due to coronavirus disease pandemic; and the need to implement the enhanced community quarantine in Luzon and other parts of the country starting March.
"COVID-19 has certainly posed serious challenges to the country’s strong growth and development prospects. Facing unprecedented challenges, the Philippine economy, not surprisingly, contracted by 0.2 percent in the first quarter of 2020, compared to the 5.7 percent growth during the same period last year," he said in a virtual press conference.
"This is the first time real GDP growth fell into negative territory since 1998 during the combined El Niño and Asian Financial Crisis," he added.
Despite the "great cost" to Philippine economy due to the imposition of the ECQ in Luzon and other parts of the country, Chua, also the acting director general of the National Economic and Development Authority, said the priorities of the government are clear, which are "to protect lives and health of our people."
According to PSA, the main contributors that caused GDP to shrink were manufacturing, transportation and storage, and accommodation and food service activities.
Among the major economic sectors, agriculture, forestry and fishing fell by 0.4 percent; and industry, 3 percent. Services sector posted a growth of 1.4 percent during the first quarter.
The gross national income, which included income from the overseas Filipino workers, also contracted by 0.6 percent.
Thousands of OFWs have been displaced by COVID-19.
While the economy contracted during the first quarter of this year, Chua said it was "respectable" and compared to other countries, "we are in a better footing."
He indicated that the second quarter GDP performance could not be favorable also.
But Chua said that with the placing of two-thirds of the local government units in the country under the general community quarantine starting May 1, "that is basically the light we are seeing at the end of the tunnel."
President Rodrigo Duterte, with the recommendation of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases, has approved the placing of most parts of the country where there were moderate to low risks of COVID-19 infections under GCQ. More sectors have been allowed to resume operations in places under GCQ.
ECQ, however, has been maintained in areas where the number of COVID-19 cases have remained high.
The places under ECQ until May 15 are Metro Manila, Central Luzon except Aurora province, Calabarzon, Pangasinan, Benguet, Albay, Iloilo province, Iloilo City, Cebu City, Cebu province, Bacolod City, Davao City, and Zamboanga City.
Chua expressed hope that with the more swabbing and testing of 30,000 possible COVID-19 patients per day starting the end of May, more places could be placed under GCQ.
Thus, he said, "we can reverse the economic trajectory by June so that by second half of the year, we can fully recover."
Chua said in the coming weeks, the economic team and members of Congress would work out an economic recovery plan that would gradually get people back to work, get businesses to normalize, and get the country back on track to achieve its pre-crisis growth and job potential.
"In this new normal that we are facing, structural reforms are needed to improve our resiliency and help us prepare for similar challenges in the future," he said.
The official said the government also remains committed to getting the Build, Build, Build infrastructure program back on track.
He also underscored the need to transition to a digital economy in the wake of the COVID-19 crisis.
"Our digital infrastructure needs to be improved; the digital divide needs to be addressed. A number of structural reforms are also needed and be put in place," he said.
Chua, who is a member of the IATF, said that any recommendation that NEDA would make prior to the expiration of ECQ in Metro Manila, Central Luzon, Calabarzon and a few other provinces and cities in the country, would be based on science and the capacity of health sector of each LGU. Celerina Monte/DMS
