Philippine economy shrinks more slowly in Q4, posts record contraction in 2020

The economy suffered its first recession in nearly 30 years in the second quarter of 2020 as the country struggled to contain the Covid-19 pandemic. — Reuters pic

MANILA, Jan 28 — The Philippine economy shrank more slowly in the fourth quarter of last year, official data showed today, but the economy saw a record full-year contraction in 2020 as it grappled with the fallout of the Covid-19 pandemic.

Gross domestic product (GDP) shrank 8.3 per cent in the December quarter from a year earlier, the statistics agency said, against expectations for a 8.5 per cent fall in a Reuters poll. The economy fell a revised 11.4 per cent year-on-year in the third quarter.

For the whole of 2020, GDP shrank 9.5 per cent — the biggest contraction recorded in a data series which began in 1946. That was also at the top end of government forecasts for a 8.5 per cent to 9.5 per cent slump last year.

The economy suffered its first recession in nearly 30 years in the second quarter of 2020 as the country struggled to contain the Covid-19 pandemic. The Philippines has the highest number of coronavirus infections and Covid-19 deaths in Southeast Asia after Indonesia.

“Private consumption remained weak. While the government relaxed restriction in the supply side by allowing more public transport and establishments to operate, restrictions on the demand side notably the mobility of children and families prevented private consumption from making a stronger comeback,” said Economic Planning Secretary Karl Chua during the briefing.

The government has eased coronavirus curbs from the strictest level imposed in the early part of 2020, but partial restrictions remain in place in the capital region as local cases reached over half a million and fatalities exceeded 10,000.

Chua added that the prospects for 2021 were “encouraging”, reiterating a previous government forecast for 6.5 per cent-7.5 per cent growth this year.

Today’s data showed the economy grew a seasonally adjusted 5.6 per cent quarter-on-quarter, slowing from an 8 per cent growth in the September quarter.

Government expenditure grew 4.4 per cent year-on-year in the fourth quarter, while household spending declined by 7.2 per cent

The Philippine central bank delivered 200 basis points of rate cuts last year to try to soften the blow from the pandemic. Governor Benjamin Diokno told Reuters this month that the current accommodative monetary stance is sufficient to revive growth. — Reuters

Source: Malay Mail