BSP projects sharper GDP contraction in Q2

THE Bangko Sentral ng Pilipinas (BSP) has estimated a deeper dive for Philippine gross domestic product (GDP) in the second quarter of the year.

Over the weekend, BSP Governor Benjamin Diokno told reporters that the central bank staff forecast the second quarter GDP to fall between 5.7 percent to 6.7 percent.

The Bangko Sentral’s outlook is worse than the -0.2 percent GDP plunge in the first quarter and the 5.4-percent rise in the same period in 2019.

“The negative impact of the Covid(coronavirus disease 2019) crisis

is harsher than what was originally thought,” Diokno said.

To contain the spread of the virus in the country, the government has imposed different forms of community quarantine in various areas in the country since March 17, more than two months after the Philippines’ first confirmed case was reported. This hampered economic activities.

In a related development, the central bank chief said S&P Global Ratings’ recent downward revision of its economic forecast for the Philippines “should be seen in a positive light.”

Diokno pointed out that S&P’s GDP estimate for the Philippines is right in the middle of growth forecasts for Association of Southeast Asian Nations-5 countries: Indonesia, 0.7 percent; Vietnam, 1.2 percent; Philippines, -3 percent; Singapore, -5 percent; and Thailand, -5.1 percent.

“The other good news is that the rating agency sees a strong rebound for the Philippine economy next year, as it forecasts that the economy will bounce back by 9.4 percent as economic activities resume,” he added.

Last week, the international credit ratings agency adjusted downward its GDP projection to -3 percent from -0.2 percent. If correct, the outlook would fall within the government’s revised assumption of a 2- to 3.4-percent contraction for 2020.

It is also worse than Fitch Ratings’ -1 percent, the World Bank’s -1.9 percent, Fitch Solutions’ - 2 percent, Moody’s Investors Service’s -2 percent, Sun Life Philippines’ -2 to -2.5 percent, ANZ Research’s -2.5 percent; Rizal Commercial Banking Corp.’s -2 to -4 percent, and ING Bank Manila’s -2.9 percent.

The new estimate is, however, better than the International Monetary Fund’s -3.6 percent, the Asian Development Bank’s -3.8 percent and Capital Economics’ -6 percent.