Economy shrinks 0.2% in Philippines

The Philippines suffered its first economic contraction in 22 years, the government announced on Saturday, with results from a first quarter weighed down by unexpected shocks, such as Covid-19.

The country’s gross domestic product declined 0.2 per cent in the three months from January to March, down from 5.7 per cent in the same period last year, said the Philippine Statistics Authority.

It was the first contraction of the domestic economy since the fourth quarter of 1998, during the Asian financial crisis, the agency said.

The Philippines’ Department of Health on Saturday recorded eight new coronavirus deaths and 147 additional confirmed cases.

In a bulletin, the department said total infections had increased to 10,610 while deaths had reached 704.

Meanwhile, agriculture and industry output contracted 0.4 per cent and three per cent, respectively, in the three-month period. Only services posted growth, of 1.4 per cent, during the first quarter, it added.

Gross national product, which includes income from abroad, such as foreign direct investments and remittances from overseas Filipinos, also contracted 0.6 per cent in the first quarter.

“Our country has faced significant socioeconomic risks and shocks during the first quarter of 2020, all totally unexpected,” acting Socioeconomic Planning Secretary Karl Kendrick Chua said.

A volcano eruption near Manila in January, and a significant decline in tourism and trade starting in February due to the Covid-19 outbreak, contributed to the contraction, he said.

The coronavirus-related lockdown of the capital and other parts of the country from the middle of March was another contributing factor that pulled the economy down.

Chua said the containment of the virus has come at a “great cost to the Philippine economy”.

“Even so, our priorities are clear – to protect the lives and health of our people,” he said.

The domestic economy was expected to continue to contract in the second and third quarters of the year due to the impact of the coronavirus pandemic, central bank governor Benjamin Diokno said.

“But we’re expecting a strong bounce back in the fourth quarter,” he said.

Presidential spokesperson Harry Roque said the government was confident of a recovery because the Philippines has “very sound economic fundamentals”.

“We’re relying on government spending through the Build, Build, Build [infrastructure] programme of the government and . . . on sound monetary policy [to boost the economy],” he said. 

Source: Asia News Network