‘Economic recovery may begin in Q3’
THE country’s economy may recover starting in the third quarter of 2020 on the back of relaxed quarantine restrictions, according to a joint report by First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P).
In the June issue of their “Market Call” report, FMIC and UA&P said “improvements in the restoration of supply chains, greater mobility of freight trucks in Metro Manila, and [the likelihood of [ a] complete [ lifting] of [the] GCQ (general community quarantine) after its extension until July 15 in Metro Manila, Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon provinces) and Central Luzon, give us more optimism on the recovery, especially starting” in the third quarter.
The decrease in the number of coronavirus disease 2019 (Covid-19) deaths could be a “positive factor” in the possible recovery, they added, “even though workers may still have some safety reservations and the transport system’s nonfull blast mode provide constraints to faster recovery.”
“Improving [the] restoration of supply chains and freight transport services should keep food prices at bay and largely offset the recent spike in crude oil prices.
“We see mid-August as key to determining termining the speed of economic rebound as GDP (gross domestic product) numbers for Q2 (second quarter) come out, a new P1.3trillion stimulus package gets approved and Covid-19 deaths drop to minimal levels.
“We expect positive GDP growth starting Q3.”
The Philippine economy contracted by 0.2 percent in the first quarter on the combined impact of the Taal Volcano erruption on January 12 and the government’s imposition of an enhanced community quarantine on Luzon in mid-March to contain the spread of of Covid-19 in the country.
Lawmakers are currently pushing for the passage of an economic stimulus bill that not only seeks to assist micro, small and medium enterprises and exporters affected by the coronavirus pandemic, but also to rebuild consumer confidence.
Despite the projected recovery, FMIC and UA&P said consumer spending would not likely recover quickly as consumers might choose to save more for “unexpected adverse events,” such as a second wave of Covid-19 infections, typhoons and slow provision of state support.
Government spending could remain elevated even if the stimulus measure is passed, according to them.
FMIC and UA& P said inflation could pick up slightly as oil prices continued to drop, while food prices could record a small uptick because of the removal of strict quarantine measures. This, it added, would allow the faster return of transport services and restoration of supply chains.