Philippine Economy Battered by COVID-19: GDP Contracts by 16.5%, Lowest in 40 Years
The Philippine economy is being pummeled by the COVID-19 pandemic. The Philippine Statistics Authority reports that the Q2 2020 gross domestic product (GDP) growth rate of the country declined by a whopping 16.5 percent, the lowest rate ever recorded since at least 1981.
This makes it the worst decline in recorded history (based on available data).
Setting a Record
The GDP growth rate contracted by 0.7 percent in the first quarter (adjusted from the initial 0.2 percent report), which measured the economic effects of the Taal volcano eruption in January and the early phase of the COVID-19 pandemic and lockdown in the country. Q2 includes the months of April, May, and June--the peak of the initial lockdown in the Philippines.
After two consecutive declines in quarterly growth rates, this officially puts the Philippines in a recession. The 16.5 percent economic drop is notably worse than the economic downturn in the mid-1980s when the economy attempted to recover from the Marcos years.
Meanwhile, compared to the economy pre-pandemic, the GDP growth rate grew by 5.4 percent in the second quarter of 2019.
The 16.5 percent contraction is far worse than the 9.4 percent forecast of Bloomberg economists. However, economists expect the economy to rebound when businesses get back on their feet, which may take longer than expected given the second implementation of MECQ.
The net primary income declined 22 percent while gross national income declined as well by 17 percent. The industry and services sector contracted by 22.9 and 15.8 percent respectively, but agriculture grew by 1.6 percent.
Net exports contributed 4.9 percent to GDP growth, as well as government final consumption expenditures and breeding stocks and orchard development by 3.1 percent and 0.04 percent, respectively.
However, this was not enough to make up for the declines in household final consumption expenditures, which posted 10.7 percent declines, and construction and durable equipment, which posted 5.5 and 4.2 percent contractions, respectively.