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Philippines: Deeper contraction widely seen in Q2
MANILA, Philippines — The economy may contract further in the second quarter due to the coronavirus disease 209 or COVID-19 outbreak, according to Finance Secretary Carlos Dominguez.
In a statement, Dominguez said the economy may head deeper into the negative territory in the second quarter after contracting by 0.2 percent in the first quarter.
Dominguez, however, said the economy is expected to rebound in the second semester of 2020 on the back of government-led plans to accelerate public spending on infrastructure and social programs as well as other measures to restore consumer confidence and induce quick economic recovery.
However, the finance chief said economic improvement and the government’s bounce back plan would be contingent on whether the curve has been flattened and an effective cure or vaccine has been released by then.
The Philippine Statistics Authority (PSA) reported yesterday that the economy contracted by 0.2 percent in the first quarter. This is the first time the economy registered negative growth since the fourth quarter of 1998.
Dominguez said the negative first quarter performance was an “inevitable outcome” of COVID-19’s initial impact on the global economy at the onset of 2020.
“The outbreak of this lethal virus, which subsequently froze economies and shuttered businesses in the four corners of the world, started to take its toll on the domestic economy in February as the lockdown in China caused supply chain disruptions and stopped arrivals of Chinese tourists, hence adversely affecting Philippine trade and tourism,” he said.
According to the finance chief, the Bureau of Customs (BOC) reported a decline in the country’s trade volume with China as early as February. He said the number of cargo containers imported from China in the first half of the month fell by 62 percent year-on-year.
Dominguez said the tourism sector also took a big hit as China’s lockdown stopped the arrival of Chinese tourists to the Philippines. China accounted for the bigger number of foreign arrivals in 2019.
South Korea, the second largest source of arrivals, also imposed travel restrictions because of the contagion.
“By mid-March, the onrush of community transmissions in the Philippines prompted the national and local governments to impose containment measures in Metro Manila and most other parts of the country in a bid to stop the further spread of the virus, thereby grounding economic activity to a halt,” Dominguez said.
“It did not help first quarter growth that the local economies, particularly in the subregion of Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon) were adversely affected in January by the eruption of Taal Volcano,” he added
Source: https://www.philstar.com/business/2020/05/08/2012467/deeper-contraction-widely-seen-q2