Palace welcomes 'minimal' contraction of economy in Q1 but warns of 'steep decline'

Malacañang warned on Thursday that the state of the economy will get worse before it gets better as the country grapples with the COVID-19 pandemic.

The Philippine economy shrank 0.2% in the first three months of the year, marking the first quarterly contraction since 1998 when the country was hit by the El Niño phenomenon and the Asian financial crisis.

“We regret it but we’re glad that it’s a minimal contraction,” presidential spokesperson Harry Roque said in a televised briefing.

However, Roque said the economy will likely experience a “steep decline” in the second quarter due to the enhanced community quarantine that led to the temporary closure of most businesses and industries especially in Luzon, the country’s economic center.

“We expect the economy to shrink even more during the month of April because the whole month of April is basically under ECQ and the first two weeks of May as well. We definitely expect a big contraction but the economic planners are very vigilant,” he said.

Roque expressed optimism that the economy will bounce back strongly.

“We expect a very strong rebound courtesy of the Build, Build, Build program of the government,” he said. “We’re using public spending as a tool for economic recovery and we’re also using money supply as a tool also for economic recovery.”

Latest projections of the administration indicate that economic growth could range from -0.8% to 0% this year. --KBK, GMA News