PH Economy Continues To Dip; Not A Surprise Due To Quarantine Measures – Economist
The country’s economy has continued its downtrend for the 3rd consecutive quarter for this year, even at a slower rate than the previous quarter.
According to the Philippine Statistics Authority, the GDP contracted by 11.5% in the third quarter. This latest data may be lower than the preceding quarter, but it is an improvement from the downward revised record-low -16.9% in the second quarter.
National Statistician and National Economic and Development Authority Undersecretary Claire Dennis Mapa said in a press briefing the major contributor to the third quarter GDP decline from the expenditure side are the following:
- Construction, with -7.6 percentage points
- Household and final consumption expenditure, -6.6 percentage points
- Durable equipment, -2.6 percentage points
Meanwhile, major contributors to the July to September economic contraction on the production side were:
- Construction, -3.3 percentage points
- Real estate and ownership of dwellings, -1.6 percentage points
- Manufacturing, -1.6 percentage points
The contributors mentioned above brought the per capita GDP at -12.7% in the third quarter, which is a complete reversal of the 3.7% growth the same quarter in 2019. The per capita gross national income (GNI) was recorded at -14.2% versus the 3.7% growth last year.
Currently, the year-to-date, economic growth averaged at -10% in the first nine months of 2020. This makes it very challenging for the country to achieve the economic managers’ forecast for the full year with a 6.6% growth needed in the fourth quarter. Mapa acknowledged that the full-year forecast of the government which is -5.5% is no longer feasible at this point.
Meanwhile. NEDA Acting Secretary Karl Chua commented that the third quarter of 2020 saw the country dance with the virus: “two steps forward and one step back.” He explained that in August, the National Capital Region (NCR) and neighboring provinces reverted to modified enhanced community quarantine (MECQ) status for two weeks to respond to the increase in COVID-19 cases and to help prepare the hospitals’ critical care units.
He further added that earlier in June and July, Cebu City also reverted to enhanced community quarantine (ECQ) and then MECQ to improve its health system. Several other local government units (LGUs) also went back to more stringent quarantines to save lives.
Chua said that the quarantine restrictions have given the government ample time to expand its capacity to respond to the pandemic.
Meanwhile, the economic team is optimistic that the worst is over for the country according to the NEDA Acting Secretary. The Socioeconomic Planning chief said the smaller GDP contraction in the third quarter “indicates that the economy is on the mend.”
He assured that the path is clearer to a strong bounce-back in 2021. He further expounded that the double-digit contraction in the third quarter is not surprising given the return to more stringent quarantine measures in NCR and neighboring provinces, and Cebu City, which together accounts for around 60% of the Philippine economy.