PH GDP drops by 16.5% in Q2 after 4 months of lockdown
The Philippine Statistics Authority says this is the lowest recorded quarterly growth starting the 1981 series
THE Philippine economy technically sank into a recession after gross domestic product (GDP) shrank for a second consecutive quarter.
The Philippine Statistics Authority (PSA) on Thursday, Aug. 6, 2020, said the GDP growth rate plunged by 16.5 percent in the second quarter, when the National Capital Region and other key urban centers went into lockdown in an attempt to contain the Covid-19 pandemic.
The PSA said this is the lowest recorded quarterly growth starting the 1981 series.
The GDP growth was -7.3 percent in 1984 and 1985, as the country suffered from a political upheaval that led to the People Power Revolution, and -0.5 percent in 1991 and 1998.
A technical recession happens when economic output contracts for two consecutive quarters. In the first quarter of 2020, the GDP fell into negative territory with a growth of -0.7 percent.
In a statement Thursday, the PSA said the industry and services sectors contracted by 22.9 percent and 15.8 percent, respectively.
Agriculture grew by a minimal 1.6 percent, which was not enough to pull up the GDP.
The GDP is the sum of goods and services produced in the country.
The PSA said services and industry pulled down the growth by 9.7 percentage points and 6.9 percentage points, respectively, while agriculture contributed 0.1 percentage point.
Quarter-on-quarter, the agriculture sector posted a growth of 1.2 percent. Industry and services both declined 21.7 percent and 14.5 percent, respectively.
Net primary income from the rest of the world and gross national income (GNI) both declined by 22 percent and 17 percent, respectively.
Per capita GDP, per capita GNI, and per capita household final consumption expenditure growth rates also declined by 17.6 percent, 18.1 percent and 16.7 percent, respectively.
Meanwhile, business leaders in Cebu said they expected the economy’s second quarter performance.
Better than US
“The 16.5 percent drop in the second quarter is within our expectations. It is better than the US’s 32 percent negative growth in the same quarter. This is the effect of the lockdown which is a necessary thing under those circumstances,” Mandaue Chamber of Commerce and Industry president Steven Yu told SunStar Cebu.
Yu said the lockdowns have badly affected the small businesses which make up more than 95 percent of the country’s economy and employed millions of workers.
“We could not have done any better. The micro, small and medium enterprises (MSMEs) took much of the brunt similar with China’s,” he said.
Yu stressed that aside from the MSMEs, large enterprises are struggling too.
“But large businesses are expected to ride over the pandemic with their stronger balance sheets” he said.
Yu added that specific sectors like the business process management, essential and online businesses are affected too, but their operations will be sustained over the medium term.
But airlines, hotels, restaurants, real estate and leisure businesses are the most affected.
Rey Calooy, president of the Filipino-Cebuano Business Club, said the Covid-19 pandemic is way worse than the past financial crises.
Around 132 MSME members of FilCeb have stopped their operations due to the mounting rental fees.
“We are really in a recession because during the first quarter, it was already considered a negative growth. We expected this,” he said.