PH faces first recession in 20 Years as Covid Pulls Down the 21 Year Economic Growth

Duterte: “Bakit sa panahon ko tumama ito (Why did this strike during my watch)?… Sa akin lahat (Everything is on me).”

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Philippines braces for recession due to coronavirus -

Philippines faces first recession in 20 years -

Covid-19 to cause PH recession -

Philippines faces recession as virus shuts down economy -

Philippine economy falling into recession in 2020 -

Businessmen in Philippines brace for recession -

Coronavirus snaps Philippines' 21-year growth streak -

Duterte:“Bakit sa panahon ko tumama ito?" -

Philippines braces for recession due to coronavirus

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The Philippines expects to go into recession, as the economy contracts due to the coronavirus outbreak and lockdowns associated with it.

Finance Secretary Carlos Dominguez III said at the late night address of President Rodrigo Duterte and key Cabinet members on Thursday, April 9: "Ngayon, itong COVID-19 has hit us in a very hard way. Ang katotohan lang, ang ating estimate natin our GDP (gross domestic product) growth will be 0% or -1%." (Now, this COVID-19 has hit us in a very hard way. To be honest, our estimated GDP growth will be 0% to -1%.)

Dominguez's latest estimate is grimmer than the Asian Development Bank's outlook for the Philippines, which expected a 2% full-year GDP growth. The World Bank's forecast was even hopeful at 3%.

Still, this is a downward turn for the Philippine economy that earlier set its eyes at a 6.5% to 7.5% GDP growth target for 2020. (READ: Coronavirus seen to make Philippines miss 2020 GDP growth target)

Bangko Sentral ng Pilipinas governor Benjamin Diokno called this slide a "technical recession" in a CNN Philippines interview, where the country will experience economic contraction due to two quarters of negative growth.

Duterte recently extended the lockdown imposed on Luzon until April 30, two weeks from the original April 12. The longer lockdown strained the economy activity in Luzon, which accounts for 73% of the GDP.


Philippines faces first recession in 20 years

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Strict quarantine measures to contain the coronavirus slammed the brakes on the Philippines' two decades of uninterrupted growth in the first quarter, hurtling the economy towards a recession this year.

Gross domestic product (GDP) unexpectedly shrank 0.2 per cent in the three months to the end of March compared the same period last year, the first decline since the fourth quarter of 1998, data from the statistics agency showed on Thursday.


Covid-19 to cause PH recession – Fitch Solutions

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“We at Fitch Solutions expect the Philippine economy to fall into recession in 2020 as the Covid-19 outbreak and resultant containment measures take their toll on economic activity,” said Fitch Solutions.

“Key to our revision is an expectation for household consumption to prove vulnerable through the year on the back of a worsening outlook for household incomes and lower confidence,” it added.

The Philippine economy contracted by 0.2 percent in the first quarter of the year, the first decline recorded since the fourth quarter of 1998.

“The Q120 (first quarter 2020) reading came in below our expectations, and as we flagged, we are becoming increasingly aware of how significant the impact of lockdown measures can be on growth readings. As such, with the Philippines in lockdown through April and into May, the drag on growth will pull the economy into recession,” said Fitch Solutions.

It said that while the lockdown measures will likely ease in the second and third quarter of the year, there will still be some drag due to containment rules and subdued external demand.

Fitch Solutions said remittances will significantly decline as the global recession will take its toll on employment and earnings around the world.

To help cushion the growth slowdown, Fitch Solutions said government consumption should be increased to offset lower private sector demand and investment.

“To combat the slowdown we do anticipate further stimulus, but note that the lack of a significant fiscal stimulus package at the time of writing does signal some downside risks to our forecast,” said Fitch Solutions.

The government earlier announced that it will put in place fiscal measures amounting to 1.1 percent of gross domestic product to support the economy during the Covid-19 crisis.

“Yet in comparison to measures announced in Thailand, which equate to 9 percent of GDP (gross domestic product) and the loan guarantees of Malaysia, the Philippine government’s response looks relatively restrained,” said Fitch Solutions.

“A large fiscal package could boost domestic confidence and we believe the government has scope, given improved reserve buffers and public debt at 41.5 percent of GDP in 2019. On the monetary side, easing inflationary pressures and the peso exchange rate’s stability offers further scope for easing, and we forecast a minimum of an additional 50 bps (basis points) of cuts to the key policy rate by year-end, which would take the key policy rate to 2.25 percent,” it added.


Philippines faces recession as virus shuts down economy

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Gross domestic product unexpectedly shrank 0.2% in January to March from the same period last year, the first decline since the fourth quarter of 1998, data from the statistics agency showed on Thursday.

The contraction dashed forecasts for 3.1% growth and economists now believe GDP will see a steeper drop ahead as an extended lockdown in the capital takes a heavier toll on domestic demand.

“First-quarter slump is the tip of the iceberg,” said Alex Holmes, Asia Economist at Capital Economics, in a note. “The second-quarter figures are likely to be much worse”.

Seasonally adjusted GDP fell 5.1% versus fourth-quarter 2019.

The Philippines placed the main island of Luzon, which accounts for more than two thirds of the economy and half of the population of more than 107 million, on lockdown from mid-March until the end of April.

The enhanced community quarantine (ECQ) measures, among the strictest in Asia, was relaxed from May 1, paving the way for incremental resumption of work and commercial activity in low-risk areas. However, Manila, where most cases are, remains under strict stay-at-home orders.

Household consumption slowed to 0.2% in the first quarter from last year, its weakest in at least two decades and down sharply from the fourth quarter’s 5.7%.

Government spending also grew at a much slower pace of 7.1% in the first three months of the year from a year earlier, compared with 17% in the final three months of 2019.

Capital formation fell a hefty 18.3% after posting 2.5% growth in the fourth quarter.

“Containing the spread of the virus and saving hundreds of thousands of lives through the imposition of ECQ has come at a great cost to the Philippine economy,” Acting Economic Planning Secretary Karl Chua told an online news conference.

The Philippines recorded its first local transmission of the virus in March and has since registered more than 10,000 confirmed cases and more than 600 deaths.

To support growth, the Bangko Sentral ng Pilipinas (BSP) has cut interest rates three times this year, with the latest move in April an off-cycle easing that brought the benchmark interest rate PHCBIR=ECI to a record low of 2.75%.

BSP Governor Benjamin Diokno signalled he was in no hurry to slash policy rates again, saying the cumulative 125 basis point cut in interest rates so far this year was “appropriate to buffer the country’s growth momentum and boost market confidence amid stronger headwinds”.

“It is time to pause, monitor and evaluate what’s happening,” Diokno said in a news conference streamed online.

Diokno said he expects the economy to bounce back strongly in the fourth quarter on the assumption the pandemic will be contained in the second half.


Philippine economy falling into recession in 2020

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Fitch Solutions Country Risk and Industry Research downgraded further its outlook on the Philippine economy, with the country now widely expected to fall into recession.


In a commentary released to reporters, Fitch Solutions said it now expects full-year growth at -0.2% in 2020, lower than the already downward revised 0.5% outlook earlier in May.

"We at Fitch Solutions expect the Philippines economy to fall into recession in 2020, as the COVID-19 outbreak and resultant containment measures take their toll on economic activity," it said.

The commentary came after the Philippine Statistics Authority (PSA) reported a 0.2% contraction in the first quarter of the year, attributed to the eruption of the Taal Volcano, decline in trade due to COVID-19, and the enhanced community quarantine (ECQ).

"The Q120 reading surprised to the downside, but also signals how deep growth is likely to contract in Q220," said Fitch.


Businessmen in Philippines brace for recession

Through fire, drought and a botched military putsch, Jojo Tan's convenience store franchise remained open for 14 years, until the COVID-19 pandemic struck, plunging his business and many others into a day-to-day existence.

Tan's 7-Eleven store along Timog Avenue in Quezon City now records 500 transactions from 1,900 before the lockdown. Sales are down 60 percent and the shop is open less than 24 hours only on weekdays.

Faced with past calamities, natural and man-made, Tan said he "took it head on with courage and used our experiences from the past to tackle and overcome each and every obstacle."

"Then COVID-19 happened. We were stunned, to say the least. We were not prepared for it," he said.

"We are coping one day at a time. It is very difficult but compared to others, we still feel fortunate and blessed to have food on the table... Challenges and hardships are a necessary evil in our lives," Tan told ABS-CBN News.

Tan's plight mirrors the damage wrought by the pandemic and the resulting lockdown on the economy. The Philippines will report on Thursday first quarter gross domestic product data, which likely grew below 6 to 6.5 percent, according to Bangko Sentral ng Pilipinas Governor Benjamin Diokno.

Economists polled by Bloomberg gave a median growth forecast of 2.9 percent. 

The January to March numbers will precede what economic managers and analysts predict will be a recession -- two successive quarters of contraction -- before a recovery in the fourth quarter.

The lockdown or enhanced community quarantine in Metro Manila and urban areas deemed high risk is scheduled to end after two extensions, after which the areas may be placed general quarantine with fewer restrictions.


Coronavirus snaps Philippines' 21-year growth streak

The Philippine economy has fallen into its first contraction since the fourth quarter of 1998, which came a year after the Asian financial crisis and during an El Nino drought.

The Philippine economy contracted 0.2% in the first quarter through March as travel restrictions and lockdowns crippled business activity and household consumption.


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