As predicted, the Philippine economy plunged into a recession because of the lockdowns that shuttered businesses and suspended public transport in an attempt to stop the spread of the coronavirus disease 2019 (COVID-19).
The Philippine Statistics Authority (PSA) announced on Thursday, August 6, 2020, that gross domestic product (GDP) contracted sharply by 16.5% in the second quarter following the revised first quarter growth of -0.7%.
With GDP in negative territory for two consecutive quarters, the economy is technically in a recession.
For the first half (January to June) of 2020, Philippine GDP growth was -9.0%, the worst among the major economies in Southeast Asia.
Finance Secretary Carlos G. Dominquez III, in a press conference, noted that Singapore’s GDP growth for the same period is -6.5%; Thailand, also estimated at -6.5%; Malaysia, estimated at -3.9%; and Indonesia, -1.2%.
Only Vietnam grew by 2.1% in the first half of 2020.
In its statement, the PSA traced the decline to contraction in the Industry and Services sectors.
The Industry sector fell by 22.9% while Services shrank by 15.8%.
Only Agriculture, among the major economic sectors, posted a positive growth of 1.6%.
The main contributors to the decline were: Manufacturing, -21.3%; Construction, -33.5%; and Transportation and Storage, -59.2%.
On the expenditure side, major items that declined were: Household Final Consumption Expenditure (HFCE), 15.5%; Gross Capital Formation (GCF), 53.5%; Exports, 37%; and Imports, 40%.
On the other hand, Government Final Consumption Expenditure (GFCE) posted positive growth of 22.1%.
Net Primary Income (NPI) from the Rest of the World and Gross National Income (GNI), which is GDP added with net income from overseas, both declined by 22% and 17%, respectively.
Metro Manila, which comprises the National Capital Region and accounts for about 70% of the country's total output along with the rest of Luzon, went into lockdown in mid-March as cases of coronavirus infection started to surge.
Cebu followed with the declaration of an enhanced community quarantine on March 30, a couple of days after its capital Cebu City also went into lockdown. Other local government units followed.
During the lockdown, which went on for more than two months, public transport systems were suspended and all non-essential businesses were closed.
Unemployment soared as employers were forced to retrench to cope with the lack of business.
Government officials have predicted that the second quarter economic performance would be worse, but they also believed that the economy hit the bottom in April and May and has started to recover. (Ventures Cebu)