Philippines drops into recession after record GDP slump in second quarter

Bonifacio Global City, a previously busy urban hub for business and leisure in Taguig, Metro Manila, is deserted during the lockdown

The Philippine economy fell into recession for the first time in 29 years with a record slump in the second quarter as the country struggles to contain the coronavirus pandemic. Official data released on August 6 showed that GDP tumbled 16.5 per cent in the April-June period from the same period a year earlier. It is the biggest slump since comparable GDP data was first recorded in 1981.

Moreover, as the Philippine government reimposed another lockdown in Metro Manila and parts of Luzon on a new virus spike, the outlook for the full year remains grim. The country’s economic managers said they now expect the economy to shrink by 5.5 per cent this year, down from earlier estimates for a two to 3.4 per cent decline. However, a “strong rebound” is expected for 2021 and 2022.

The number of coronavirus infections in the Philippines surged past 119,000 as of August 6, a more than fivefold increase since early June when economy-crippling restrictions were eased. Of the infected, 2,150 died and 66,837 recovered.

The Philippines is expected to exceed Indonesia in the next few days to become the country with the highest number of cases in Southeast Asia.

Jobless rate grows while consumption and industry production shrinks

The government has allocated some 655 billion pesos ($13.34 billion) to help people face the pandemic and another 59 billion pesos ($1.2 billion) to improve the healthcare system, but this has done little to ease the pain of a population facing record-high unemployment.

Economic woes have been amplified by a drop in remittances from the hundreds of thousands of Filipinos working abroad who typically send money to their families every month, which fuels consumer spending in the country – the main driver of growth.

However, remittances fell 6.4 per cent in the first five months compared with the same period last year, according to the central bank, as thousands of seafarers, cleaners, maids and construction workers lost their jobs and returned home. Consumer spending in the second quarter plummeted 15.5 per cent, the country’s central statistics agency said. In addition, industrial production declined by 22.9 per cent, while services contracted by 15.8 per cent.

“It will be a rough road to recovery as trade-offs between economic recovery and health will remain a big challenge to both the private and public sectors,” socioeconomic planning secretary Karl Chua said.



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Bonifacio Global City, a previously busy urban hub for business and leisure in Taguig, Metro Manila, is deserted during the lockdown The Philippine economy fell into recession for the first time in 29 years with a record slump in the second quarter as the country struggles to contain the coronavirus pandemic. Official data released on August 6 showed that GDP tumbled 16.5 per cent in the April-June period from the same period a year earlier. It is the biggest slump since comparable GDP data was first recorded in 1981. Moreover, as the Philippine government reimposed another lockdown in Metro Manila...

Bonifacio Global City, a previously busy urban hub for business and leisure in Taguig, Metro Manila, is deserted during the lockdown

The Philippine economy fell into recession for the first time in 29 years with a record slump in the second quarter as the country struggles to contain the coronavirus pandemic. Official data released on August 6 showed that GDP tumbled 16.5 per cent in the April-June period from the same period a year earlier. It is the biggest slump since comparable GDP data was first recorded in 1981.

Moreover, as the Philippine government reimposed another lockdown in Metro Manila and parts of Luzon on a new virus spike, the outlook for the full year remains grim. The country’s economic managers said they now expect the economy to shrink by 5.5 per cent this year, down from earlier estimates for a two to 3.4 per cent decline. However, a “strong rebound” is expected for 2021 and 2022.

The number of coronavirus infections in the Philippines surged past 119,000 as of August 6, a more than fivefold increase since early June when economy-crippling restrictions were eased. Of the infected, 2,150 died and 66,837 recovered.

The Philippines is expected to exceed Indonesia in the next few days to become the country with the highest number of cases in Southeast Asia.

Jobless rate grows while consumption and industry production shrinks

The government has allocated some 655 billion pesos ($13.34 billion) to help people face the pandemic and another 59 billion pesos ($1.2 billion) to improve the healthcare system, but this has done little to ease the pain of a population facing record-high unemployment.

Economic woes have been amplified by a drop in remittances from the hundreds of thousands of Filipinos working abroad who typically send money to their families every month, which fuels consumer spending in the country – the main driver of growth.

However, remittances fell 6.4 per cent in the first five months compared with the same period last year, according to the central bank, as thousands of seafarers, cleaners, maids and construction workers lost their jobs and returned home. Consumer spending in the second quarter plummeted 15.5 per cent, the country’s central statistics agency said. In addition, industrial production declined by 22.9 per cent, while services contracted by 15.8 per cent.

“It will be a rough road to recovery as trade-offs between economic recovery and health will remain a big challenge to both the private and public sectors,” socioeconomic planning secretary Karl Chua said.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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