Growth, even just for a quarter, unlikely this year — BSP chief
MANILA, Philippines — There is no chance for economic growth this year, the Bangko Sentral ng Pilipinas (BSP) chief said on Tuesday.
“Domestic economic activity is projected to follow a U-shaped quarterly recovery path with output likely to contract further in the remaining quarters of 2020,” BSP Governor Benjamin Diokno said in a statement on Tuesday.
“Growth is expected to recover in 2021 once the impact of government policy support measures gains traction,” Diokno added.
The latest statement from the central bank dashed hopes the local economy would at least record a quarterly growth to partially offset an expected recession in the second quarter. A recession is defined as a two succeeding quarters of negative growth.
Official gross domestic product (GDP) data for April-June period will not come out until August, but economic managers have indicated contraction was likely worse than the 0.2% recorded in the first quarter, already the weakest performance since the final three months of 1998.
The Duterte administration expects GDP to shrink between 2-3.4% this year.
Cid Terosa, dean of the University of Asia and the Pacific’s School of Economics, agreed with the central bank’s assessment. “Year-on-year quarterly growth will contract further relative to quarterly growth last year,” Terosa said in a text message.
“Although business and economic activities have started to move forward, the momentum is not strong enough to outpace last year's quarterly growth,” he added.
Indeed, anecdotal evidence showed business shutting down even as most of the economy have gone back to business from June 1. Latest labor department showed that as of July 6, 4,354 companies have stopped operations, 1,443 of which were located in Metro Manila, the center of business and commerce.
While data covers companies that closed down from January, meaning before the pandemic struck, the figures nonetheless demonstrated the devastating impact of the outbreak and lockdowns implemented to halt the virus spread. With businesses stopping operations, 112,414 local workers were displaced, the labor agency said.
By industry, “administrative and support service activities” accounted for the bulk of retrenchments at 27% of the total equivalent to 30,831 people. It was followed by manufacturing which cornered 13% or 14,519 workers put out of jobs.
Diokno said the Philippine economy’s performance this year would likely reflect that of the global economy, which has appeared to have “further deteriorated” because the impact of state-initiated lockdowns, some of which have lingered to this day, remains uncertain.
Terosa said any relaxation on local quarantine protocols would assist the economy recover, but not immediately.
“It is in this relative context that we will see growth contracting. Quarter-on-quarter this year I see growth earnestly crawling upward because of more relaxed quarantine conditions, but year-on-year quarterly growth will pale in comparison with last year,” he said.
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