Business & Economy

Philippines enters recession as GDP contracts 16.5 percent in Q2

Manila, Aug 6 (efe-epa).- The Philippine economy entered recession after plummeting by 16.5 percent in the second quarter of the year, its biggest decline since democracy was restored in the country in 1986, dragged down by the strict and long lockdown imposed in the country to contain the COVID-19 epidemic.

The sharp decline in the gross domestic product (GDP) between April and June can be attributed to the strict lockdown that President Rodrigo Duterte’s government imposed on the island of Luzon, the largest and most populous in the Philippines, which slowed economic activity in the country.

The 16.5 percent fall in the second quarter comes after a contraction of the GDP of 0.7 percent in the first quarter, confirming that the Philippine economy had slipped into recession, which has not happened since 1991, as it had grown at an annual rate of 6 percent in the last decade, according to data released by the Philippine Statistics Authority on Thursday.

Among the main contributors to the decline were manufacturing (-21.3 percent), construction (-33.5 percent) and transportation and storage (-59.2 percent) while only only agriculture, forestry, and fishing showed growth (1.6 percent), according to the agency.

Both industry and services also decreased during the period by 22.9 percent and 15.8 percent respectively.

The Philippine government eased lockdown measures in Luzon from June, after more than two months of strict confinement, but this week Manila and the surrounding provinces – which account for 67 percent of the national GDP – were placed under another lockdown to contain a new wave of infections.

Under the lockdown approved for the capital and the surrounding area, movement will be restricted, public transport will be suspended and only one member of each family will be allowed to go out and buy essential items while non-essential establishments and industries will be closed once again.

On Thursday, the Philippine government will announce its new forecast for 2020 after predicting in May that the economy would contract by up to 3.4 percent.

Both the government’s economic team and independent analysts are confident that GDP will pick up in the third quarter as the epidemic is controlled and normality restored.

The Philippines is on the verge of becoming the new epicenter of the COVID-19 pandemic in Southeast Asia, with 115,980 confirmed cases on Wednesday, very close to the the 116,871 infections in Indonesia, whose population is more than twice that of the Philippines. EFE-EPA


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