Philippine economy to remain negative in Q3 but 'better' than Q2 —NEDA

Published September 29, 2020 01:29 PM By TED CORDERO,GMA News

The Philippine economy is still seen to post a year-on-year contraction in the third quarter of the year amid the lingering impact of the COVID-19 pandemic, the National Economic and Development Authority (NEDA) said Tuesday.

“We are hoping that it will be better than the second quarter but we don’t think it will be positive year-on-year,” NEDA Undersecretary Rosemarie Edillon said in a virtual briefing.

The country’s gross domestic product (GDP) contracted by 16.5%

in the second quarter, its worst on record in nearly three decades. 

The two straight quarters of negative GDP brought the economy to a recession for the first time since 1991.

Economic managers earlier said the worst is over in the second quarter since the economy was allowed to reopen after months of strict lockdown.

“Quarter-on-quarter it will be definitely positive looking at the results of the July LFS (Labor Force Survey), pero kung year-on-year negative pa rin siya,” Edillon said.

Unemployment rate eased to 10%, equivalent to 4.6 million jobless adults, in July from a record-high of 17.7% or 7.3 million unemployed in April as the economy gradually reopened after months of strict lockdowns to contain the spread of COVID-19. 

The Philippine economy was at a standstill during the latter part of the first quarter due to the implementation of strict quarantine measures — enhanced community quarantine (ECQ) in Metro Manila and other high-risk areas from March 17 to May 15, followed by a modified enhanced community quarantine (MECQ) until May 31.

Looser restrictions were then implemented under the general community quarantine (GCQ) starting June 1. Metro Manila and four other nearby provinces, however, were reverted to the stricter MECQ on August 4 until August 18.

“You also know that the NCR was placed back on MECQ during the period,” Edillon said.

Looking at other indicators such as the purchasing managers’ index and business confidence index, the NEDA official said the Philippine economy will still post a negative growth in the July to September period.

“Indicators such as purchasing managers’ index (PMI), it’s still below the 50% mark,” she said.

A monthly survey by the IHS Markit showed that the country’s PMI fell to 47.3, its weakest in three months. 

The PMI is a composite indicator of the manufacturing sector’s performance, with 50.0 as the threshold. A reading above 50 indicates growth, while below 50 is a contraction.

Meanwhile, the business sector’s sentiment on the economy fell to its worst since 2009 at a confidence index of -5.3% for the third quarter, according to the Bangko Sentral ng Pilipinas’ Business Expectations Survey. 

To allow further reopening of the economy, the Department of Trade and Industry is proposing to increase the operating capacity of several sectors under general community quarantine, including malls and other services-related businesses. 

For the entire 2020, Philippine economic managers expect the economy to contract by 5.5%, but growth is expected to reach 6.5% to 7.5% by 2021 to 2022. 

The World Bank, meanwhile, said the economy is likely to contract by 6.9% this year, with a worst-case scenario at -9.9%. —KG, GMA News

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