The Philippines officially entered the recession in the second quarter, an expected economic collapse caused by a pandemic that went beyond government control, with the country likely to become Southeast Asia’s coronavirus hotspot.
Gross domestic product (GDP) plunged 16.5 percent year-on-year from April to June, slipping deeper into recession following a revised 0.7 percent drop in the first quarter, as announced by the Philippine Statistics Authority early Thursday. Deep dive meant that, in nominal terms, coronavirus cut P680 billion from the economy in the second quarter of the same period a year earlier to P8.6 trillion at the end of June. Between January to June of this year, actual GDP dropped by 9% year-on-year.
With the latest data, the local economy, once considered a favorite of investors in the region, has officially sunk into a recession, defined by two consecutive quarters of negative GDP growth. Previously, the economic recession was the last recorded between the second and third quarters of 1991 when the Gulf War disrupted oil supplies and forced up global oil prices.
Yet the second-quarter contraction alone, which caught the full effect of the Luzon lockout, was so huge that it was the biggest nosedive in democratic economic results. The most recent data are the worst available data since 1981.
The high-frequency data that we are monitoring indicate that economic activity is improving much slower than elsewhere. Meanwhile, the government has been unable to cushion the blow stated by Alex Holmes, Asia economist at Capital Economics, in an e-mail in anticipation of the release of the results.
The devastating trend in the economy is not at all special to the Philippines, and Duterte administration officials have long since resigned to major economic harm from a deadly and contagious epidemic with no documented cure or vaccine to date. For all of 2020, economic officials are able to endure a GDP recession of between 3.4-5.5 percent, which is 2-3.4 percent worse than the May 27 forecasts.
However, unlike the neighboring developing countries of Thailand and Vietnam, which slowly reopened their economies, the Philippines was forced to shut down Metro Manila and four key areas in Central Luzon and Calabarzon again for 15 days last August 4th, following an uncontrolled spike in cases of coronavirus disease-2019 (COVID-19) in the economic center.
Later on, the Philippines is expected to surpass Indonesia with the majority of confirmed infections in Southeast Asia. As of the last official survey, the Philippines reported 115,980 cases against Indonesia’s 116,871 cases, but Manila has been reporting more daily than Jakarta for some time now.
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