Updated at 4:24 p.m. ET on 2020-05-07
The Philippine economy has slowed down for the first time in 22 years as the COVID-19 pandemic forced a shutdown of all economic activities, the government said Thursday.
The National Economic Development Authority said the country’s gross domestic product contracted 0.2 percent in the first quarter of the year, from 6.7 percent growth registered in the last quarter of 2019, and 5.6 percent in the first quarter last year.
Socio-Economic Planning Secretary Karl Kendrick Chua attributed the drop to a slowdown in economic activity when the Taal volcano south of Manila erupted in January, as well as when the government placed the entire island of Luzon under lockdown, or enhanced community quarantine (ECQ), to slow the spread of the coronavirus.
“Containing the spread of the virus and saving hundreds of thousands of lives through the imposition of the ECQ has come at great cost to the Philippine economy,” he said in a statement.
“Our economic growth is showing weaker performance compared to the past two decades. Even so, our priorities are clear - to protect lives and health of our people.”
The health crisis posed “serious challenges” to economic prospects in the immediate future, he said. The recently ended quarter marked “the first time real GDP growth fell into negative territory since 1998” when regional economies were battered by the El Nino weather phenomenon and the Asian financial crisis.
Novel coronavirus has infected at least 10,343 Filipinos and killed 685 others, according to official tallies on Thursday.
Based on the April 2020 World Economic Outlook of the International Monetary Fund (IMF), the global economy is projected to contract by 3 percent this year and could beat the 1.7-percent drop in GDP recorded a year after the 2008 financial crisis, he said.
“Where we are now could potentially be the worst global recession since the great depression of the 1930s,” Chua said.
“Our surveys show that while two-thirds of businesses did not operate during the ECQ, only about 20 percent of these laid off their workers. We also know that about 45 percent of non-government and self-employed workers lost their sources of income. The government stands ready to help them through our various social amelioration and wage subsidy programs,” Chua explained.
Presidential spokesman Harry Roque downplayed the first quarter figure as a “minimal contraction” but warned of further weakness going into the April-June quadrant.
“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,” Roque told reporters.
But the economy should experience a “very strong rebound” once the country fully embarks on its spending spree programmed for the year, Roque said.