MANILA -- The Philippine economy could contract by 0.2 percent this year and credit will grow at its slowest pace as a fallout from the COVID-19 pandemic, debt-watcher S&P said Thursday.

The lockdown, which started on March 17, covered Luzon Island home to roughly half of the country’s 100 million population which also accounts for 70 percent of the economy, said S&P Global Ratings associate director Nikita Anand.

The enhanced community quarantine in Metro Manila and other high risk areas will last until May 15. From May 1, the rest of the country will be under a general community quarantine with fewer restrictions and with some businesses allowed to open.

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Non-performing loans could increase by 1.8 percentage points or the equivalent of $300 billion, she said.

The Philippines will release first quarter gross domestic product data on May 7, as officials look to a recession in the second an third quarters due to a 2-month lockdown in the capital that is scheduled to last until May 15.

The Bangko Sentral ng Pilipinas slashed 100 basis points off the benchmark interest rate and signaled deeper cuts to keep the economy afloat. It also trimmed 200 basis points off banks' reserve requirement ratio to free up cash in the system.

On Tuesday, Manila sold $2.35 billion (P119 billion) in 10-year and 25-year global bonds at the lowest interest rate it had paid for such tenors, reflecting investor confidence.

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(Editor's note: An earlier version of this story misstated S&P Global's growth expectation for the Philippines. We regret the error.)