THE Philippine economy took a big hit from the coronavirus disease (Covid-19) pandemic and the Taal Volcano eruption, as gross domestic product (GDP) growth fell into negative territory to -0.2 percent in the first quarter of 2020.
The Philippine Statistics Authority (PSA) said this was the first contraction since the fourth quarter of 1998.
Acting Socioeconomic Planning Secretary Karl Kendrick Chua, in an online press conference, blamed the sharp decline on the following:
* Taal Volcano eruption which affected about 50 percent of the economy in January;
* Covid-19 pandemic, which led to a significant decline in trade and tourism in February and March; and
* Implementation of an enhanced community quarantine (ECQ) in mid-March in Luzon, which accounts for at least 70 percent of the economy.
Chua said this decline is “respectable” compared to the impact of the 1998 Asian financial crisis and 2009 global financial crisis.
“The magnitude of the impact suggests that this decline, this small decline, is actually respectable and compared to other countries, we are in a better footing,” Chua said.
He said April “will be very bad” because of the extension of the ECQ in Luzon and the implementation of similar restrictions in other parts of the country in a bid to slow the spread of the novel coronavirus, which causes Covid-19.
Chua said the ECQ as a measure to contain the spread of the virus and save lives “has come at great cost to the Philippine economy.”
Under an ECQ, public transportation systems are suspended, businesses except those engaged in essential goods and services are closed, and the people, except essential workers and frontliners, are mandated to stay home. Only one person per household is allowed to go out for a supply run.
Starting May, however, Chua pointed out that two-thirds, or two out of three, local government units (LGUs) have eased restrictions and shifted to a general community quarantine (GCQ).
Under a GCQ, public transport systems will be allowed to resume at a limited capacity and non-luxury businesses will be allowed to reopen on the condition that social distancing and minimum health protocols would be followed.
“That is basically light that we are seeing at the end of the tunnel. Now, we will use our policies proactively to ensure that we gradually normalize,” he added.
To restart the economy, government is ramping up testing for the virus through the establishment of mega swabbing centers and quarantine facilities as well as the accreditation of more testing laboratories nationwide.
The National Task Force Against Covid-19 is targeting to reach 30,000 tests per day by the end of May with these additional facilities. As of this week, tests conducted by the 22 accredited laboratories average 5,000 per day.
“We are hoping that with the 30,000 tests per day by the end of May, we can start to reverse the economic trajectory by June so that by the second half of the year, we can fully recover,” Chua said.
“The idea here is that we use our policies and our collective effort to proactively shape our future into a recovery that looks more like a V-shaped so that by the end of the year, we will have a respectable growth performance,” he added.
Earlier, the National Economic and Development Authority under Chua’s predecessor Ernesto Pernia predicted a full-year GDP growth of as low as -0.6 percent to 4.3 percent for 2020 while the Bangko Sentral ng Pilipinas saw growth at between -0.1 percent and zero.
The Philippine economy expanded by only 5.9 percent in 2019, its slowest growth in eight years and the first GDP growth rate below 6.0 percent since the 3.7 percent in 2011.
This was blamed on the delayed approval of the national budget and the tight monetary policy to tame inflation.
For 2020, first-quarter economic growth plunged to -0.2 percent compared to the 5.7 percent recorded in the first quarter of 2019.
The PSA said the main contributors to the decline were: manufacturing; transportation and storage; and accommodation and food service activities.
The agriculture, forestry, and fishing, and industry sectors contracted by 0.4 percent and 3.0 percent, respectively.
The services sector posted a minimal growth of 1.4 percent during the period.
On the expenditure side, items that declined were: gross capital formation (GCF), 18.3 percent; exports, 3.0 percent; and imports, 9.0 percent.
Meanwhile, household final consumption expenditure (HFCE) and government final consumption expenditure (GFCE) posted positive growth rates of 0.2 percent and 7.1 percent, respectively.
Net primary income (NPI) from the rest of the world dropped by 4.4. percent resulting in the 0.6 percent contraction in the gross national income.
Estimates on the first quarter 2020 National Accounts of the Philippines (NAP) are based on the 2018 base year following the recent revision and rebasing of the NAP series.
As of May 6, the novel coronavirus, or Sars-CoV-2, has infected 10,004 people in the country, including 658 who had died from Covid-19 and 1,506 who have recovered.
Globally, the virus has killed 247,503 people and infected more than 3.58 million in over 200 countries as of May 6, the World Health Organization said. (MVI/SunStar Philippines)