MANILA -- (UPDATE) The Philippine economy shrank in the January to March period, for the first time since 1998, due to the COVID-19 pandemic and resulting lockdown, officials said Thursday.
Gross domestic product contracted by 0.2 percent, compared the 2.9 percent median growth forecast of economists in a Bloomberg poll. Economic growth was at 6.7 percent in the fourth quarter and 5.7 percent in the first quarter of 2019.
An economic recovery plan is being worked out to put the Philippines "back on track" to pre-pandemic levels, said Acting Socioeconomic Planning Secretary Karl Kendrick Chua. The Taal Volcano eruption in January also contributed to the contraction, he said.
"Saving hundreds and thousands of lives has come at a great cost to the Philippine economy... Our priorities are clear: to protect the lives and health of our people," Chua said.
The world economy is facing its worst challenge since the Great Depression, he said.
"These are extraordinarily trying times and the road ahead is uncertain... This crisis shall also pass since we are working together as a nation," he said.
Analysts and government officials had said that the economy could contract in the second and third quarters, meeting the technical definition of a recession, before a rebound in the fourth quarter.
"The problem with what is happening now is really catching the wind... We recognize there will be a caving-in in Q2 (second quarter)," said Unionbank chief economist Carlo Asuncion.
Due to the second lockdown extension to May 15, the economy could contract by 0.8 percent for the full year before recovering in 2021, when growth may hit as high as 7.8 percent, said Bangko Sentral ng Pilipinas Governor Benjamin Diokno.
The recovery from the lockdown will be "very slow," said Asuncion. A vaccine and a cure are key to restoring consumer confidence in the economy, he said.
The lockdown or enhanced community quarantine is in effect in Metro Manila and other urban centers. The rest of the country is under general community quarantine with fewer restrictions.