MANILA (UPDATE) – The Philippine economy shrunk in the second quarter plunging into recession, the first time in nearly 30 years, following one of the longest and strictest lockdowns in the world to curb the spread of COVID-19.
Second quarter gross domestic product (GDP) growth was at -16.5 percent, the Philippine Statistics Authority reported Thursday.
“Gross domestic product declined by 16.5 percent in the second quarter of 2020. This is the lowest reported quarterly growth starting in the 1981 series,” National Statistician Claire Dennis Mapa said.
"The decline was “partly because of the lockdown. You’re seeing drop in the sectors. We’re seeing that because of the April, May lockdown. That’s the data we’re receiving,” he added.
A Reuters poll of 13 economists forecast a range of -18 to -4.2 percent as most analysts have been split on how steep the contraction would be.
Household consumption dropped 15.5 percent, its "biggest in history." Before the -15.5 percent second quarter data, its last dip was in 1985 during the Marcos era, data processed by the ABS-CBN Data Analytics showed.
Metro Manila and Calabarzon, with the rest of Luzon, were placed under strict quarantine after cases of COVID-19 rapidly rose in March.
Metro Manila, home to roughly a tenth of the Philippines' 100 million population, accounts for a third of the country's gross domestic product while neighboring Southern Tagalog region serves as home to several economic zones and industrial plants.
First quarter GDP contracted for the first time since 1998 due to the impact of COVID-19 and resulting lockdowns.
First quarter GDP has been revised to -0.7 percent from -0.2 percent, data showed.
“The Philippine economy crash landed into recession with the 2Q GDP meltdown showcasing the destructive impact of lockdowns on the consumption-dependent economy,” ING senior economist Nicholas Mapa said.
“With record-high unemployment expected to climb in the coming months we do not expect a quick turnaround in consumption behavior, all the more with COVID-19 cases still on the rise,” he added.
The coronavirus pandemic will cost the economy P2.2 trillion this year or nearly a tenth of gross domestic product, said the Development Budget Coordination Committee, which is in-charge of setting the government’s macroeconomic goals and policies.
Metro Manila, Cavite, Laguna, Rizal and Bulacan were placed back under modified enhanced community quarantine (MECQ) from Aug. 4 to Aug. 18 after confirmed COVID-19 cases surged.
The shift back to modified enhanced community quarantine will have "limited economic impact," Bangko Sentral ng Pilipinas Gov. Benjamin Diokno earlier said as analysts believed that by doing so would make it more difficult for businesses to survive the pandemic.
Since the lockdown was imposed in March, unemployment ballooned 17.7 percent or equivalent to 7.3 million jobless Filipinos. Some 30 percent of businesses have closed permanently or temporarily due to the pandemic, the Department of Trade and Industry said in June.
Aside from local workers, many overseas Filipinos lost their jobs and were repatriated due to COVID-19. Remittances could contract by as much as 5 percent this year, Diokno earlier said.
The Asian Development Bank said remittances in 2020 could shrink by as much as 20.2 percent compared to 2018 numbers in a "worse case scenario."