MANILA, August 6 – The Philippine economy on Thursday contracted by 16.5 percent in the second quarter of 2020 compared to 2019, the lowest recorded quarterly growth since 1981, due to the country’s current lockdown measures to fight COVID-19.
This drop follows a 0.7 percent economic shrink in the first quarter of the year, confirming that the Philippines are in recession amid the global pandemic.
In the recent report of the Philippine Statistics Authority, the main contributors to the Gross Domestic Product (GDP) decline were manufacturing, -21.3 percent; construction, -33.5 percent; and transportation and storage, -59.2 percent, in which all operations were stopped due to community quarantine series implemented on the island of Luzon, Metro Manila, major provinces, and key cities in the country.
Among the major economic sectors, only agriculture, forestry, and fishing sectors, which are the country’s major backbone increased with 1.6 percent growth. Rice and sugarcane productions grew by 7.2 percent, and 76.0 percent growth respectively.
However, industry operations and services both decreased during the period by 22.9 percent and 15.8 percent.
The country’s manufacturing sector, which comprised 62.2 percent of the total industry, now declined by 21.3 percent. The decline came from stopped food products operations, computers, and electronics, pharmaceutical and chemical products, among others.
Metro Manila, the country’s central business district affects the economic growth due to halted business activities made by a series of lockdowns since the month of March.
Services, which include accommodation and food services and real estate businesses also declined by 15.8 percent in the second quarter of 2020.
“However, exports and imports are beginning to recover. Exports improved from -50 percent in April 2020 to -13 percent in June of 2020, an average of -30 percent in the second quarter,” Karl Kendrick Chua, Acting Secretary for Socioeconomic Planning and Director-General of the National Economic and Development Authority said during the press briefing.
The Philippine exports to China, one of the country’s largest trading partners improved from -55 percent in April to a +2.8 percent expansion in June.
“As China’s economy improves in the second semester, we could expect export growth to follow,” Chua said.
Philippine economists see that the pandemic and its adverse effects on the economy are testing the economy like never before. But unlike in the past crisis, the country is in much stronger positions to address the crisis.
President Rodrigo Duterte ordered late Sunday that Metro Manila and four nearby provinces revert to tighter quarantine restrictions for two weeks as coronavirus cases in the country soared past 100,00.
The so-called Modified Enhanced Community Quarantine from Aug. 4 to 18 placed the said areas where the country’s businesses are mostly active.
Under the two-week quarantine restrictions, domestic flights and public transportation are stopped, while major businesses are currently closed.
As of Thursday, the Philippines had recorded 119,460 cases, with 66,837 recoveries, and 2,150 total reported deaths. (By Vic Galinato)