The Philippines Spirals into Recession Following Months-Long Lockdowns

MANILA, KOMPAS.com – Months-long coronavirus lockdowns sent the Philippines into a recession after the country experienced its biggest quarterly contraction on record.

Philippine Statistics Authority data showed the Philippines’s gross domestic product shrank 16.5 percent on-year in the second quarter.

The economic results came as a result of the world’s longest stay-at-home orders to slow Covid-19 virus transmissions in the Southeast Asian nation.

Read also: Duterte Warns of Arrests as the Philippines Plans to Increase Covid-19 Testing

The Philippines is not the only country with a battered economy as the coronavirus pandemic has devastated economies globally.

Businesses have been wrecked and millions of Filipinos have been forced out of work as the national government forged ahead with measures to contain the disease.

It followed a revised 0.7 percent contraction in the first three months of the year and marked the biggest reduction in economic activity since records began in 1981 during the Ferdinand Marcos dictatorship. It is the country's first recession in three decades.

The outlook for the archipelago is bleak, with the number of coronavirus infections surging past 115,000 this week — a more than fivefold increase since early June when the economy-crippling restrictions were eased.

"Without doubt, the pandemic and its adverse effect on the economy are testing the economy like never before," said acting Socioeconomic Planning Secretary Karl Chua.

"But unlike past crises, the Philippines is now in a much stronger position to address the crisis."

As health workers struggle to cope with the influx of patients, more than 27 million people in Manila and four surrounding provinces on the main island of Luzon — which accounts for more than two-thirds of the country's economic output — went back into a partial lockdown for two weeks on Tuesday to help ease the strain on hospitals.

Read also: Lockdown in the Philippines Reinstated as Health Workers Warn of a Losing Covid-19 Battle

But President Rodrigo Duterte, who was reluctant to tighten restrictions after millions lost their jobs in the first shutdown, has warned the country cannot afford to remain closed for much longer.

Businesses have been wrecked and millions of Filipinos have been forced out of work as the national government forged ahead with measures to contain the disease.

"The problem is we don't have money anymore. I cannot give food anymore and money to people," Duterte said Sunday.

The country's economic woes have been exacerbated by a drop in remittances from the legion of Filipinos working abroad who typically send money to their families every month, which fuels consumer spending — the main driver of growth.

Remittances dropped 6.4 percent in the first five months, compared with the same period last year, according to the central bank.

Thousands of seafarers, cleaners and construction workers have lost their jobs and returned home.

Consumer spending in the second quarter plummeted 15.5 percent, the statistics agency said.

"It will be a rough road to recovery as trade-offs between economic recovery and health will remain a big challenge to both the private and public sectors," said Emilio Neri, lead economist at Bank of the Philippine Islands.

(Writers & Editors: MFF/AMJ/DAN, Agence France-Presse) 

Source: http://u.afp.com/3B69