Philippine economy likely to contract further this year: Fitch Ratings

ABS-CBN News

Posted at Jun 29 2020 10:01 AM | Updated as of Jun 29 2020 01:49 PM

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MANILA - The Philippine economy could contract further this year, depending on how the COVID-19 pandemic pans out, a Fitch Ratings analyst said Monday.

The gross domestic product (GDP) could contract by 4 percent this year before recovering in 2021, Fitch Ratings' Philippine analyst Sagarika Chandra told ANC. 

Residents from Barangay Batasan Hills in Quezon City line up to receive cash under the social amelioration program amid the enhanced community quarantine on May 4, 2020. Mark Demayo, ABS-CBN News/File

"We expect GDP to contract by about 4 percent this year and recover next year...In May we did flag that the projections are subject to uncertainty and it really depends on how this virus develops locally as well as globally," Chandra said.

"There seems to be a bit of uncertainty in terms of the trajectory of this pandemic," she added.

Fitch Ratings also expect a "pretty sharp" contraction in growth for Singapore, followed by the Philippines, she said.

The economy will likely contract by 2 to 3.4 percent this year, according to revised government assumptions.

The Bangko Sentral ng Pilipinas on Thursday lowered the benchmark borrowing rate to 2.25 percent to mitigate downside risk to growth and boost market confidence, BSP Governor Benjamin Diokno said.

The decision to cut rates by 50 bps last June 25 was a “preemptive move” in response to the International Monetary Fund’s forecast that global recession could further worsen, he said.