The Worst Is Over, Says the Philippines' Economic Team, After GDP Declines by 11.5% in Q3
ILLUSTRATOR ROLAND MAE TANGLAO
The worst is over for the Philippine economy, said Karl Chua, acting secretary of Socioeconomic Planning and the National Economic and Development Authority (NEDA).
In a virtual briefing, NEDA’s chief announced that the Philippine GDP contracted by 11.5 percent in the third quarter, which is relatively better than the 16.9 percent freefall in the second quarter of 2020.
Chua said that this indicates “the Philippine economy is on the mend. The path is clearer to a strong bounce-back in 2021.”
However, the 11.5 percent contraction in Q3 is worse than the forecasted six percent contraction by Moody’s Analytics. This is also the second-worst quarterly contraction on record and the first time in 35 or so years that the GDP experienced negative growth for three consecutive quarters.
The first quarter saw the economy decline by 0.2 percent. The second quarter of 2020 saw the country’s lowest growth based on available data from the last 40 years, with a negative 16.9 percent (revised from 16.5 percent), officially putting the country in a recession.
“Nonetheless, the economy has begun to recover. On a quarter-on-quarter basis, the economy grew by eight percent in the third quarter, reflecting the return of economic activities as the quarantine was eased,” said Chua.
Negative growth was expected in the third quarter, and the economy is not expected to stabilize until 2021. According to Bangko Sentral ng Pilipinas governor Benjamin Diokno, it won’t be until 2022 that the Philippine economy sees real growth and returns to pre-pandemic levels when the Philippines was a rising economy in Asia.
The International Monetary Fund expects the Philippines’ GDP to contract by 8.3 percent in 2020, which would be one of the lowest in Asia. Meanwhile, Reuters’ economists predicted an 8.9 percent drop.
Philippine economists forecast a more optimistic outlook at 5.5 percent for the entire year of 2020.
Despite negative growth, Chua remains optimistic that the Philippines will finally recover from the economic impact of COVID-19 as lockdowns steadily ease and the new normal is put into place.
“Managing risks, instead of avoiding them, will allow us to safely open more of the economy and help Filipinos recover their sources of income. This will also put the Philippines back on its solid growth and development trajectory,” said Chua. “Our experience with COVID-19 over the past several months tells us two things. First, the economy is strong enough to recover, if we enable it to do so. Second, our best recourse to help the economy is to manage the risks.”