MANILA, Philippines — ANZ Research expects the Philippine economy to contract by 9.2 percent in the second semester as the economy is likely to book a double-digit contraction in the third quarter due to the coronavirus pandemic.
Kanika Bhatnagar, economist at ANZ Research, said the research unit of Australia and New Zealand Bank is looking at a gross domestic product (GDP) contraction of 9.2 percent in the second half.
As a result, the economy is now expected to contract by 9.1 percent this year, a reversal of the six percent growth in 2019.
The economy stalled after Luzon was placed under enhanced community quarantine in the middle of March. The lockdown was relaxed as the National Capital Region (NCR) shifted to general community quarantine in June.
However, Metro Manila and nearby provinces reverted to stricter modified enhanced community quarantine from Aug. 4 to 18 as COVID-19 cases surged.
“We now expect 2020 GDP growth in the Philippine economy to fall by 9.1 percent, a downward revision of 6.6 percentage points from our earlier forecast,” Bhatnagar said.
ANZ Research sees the Philippine GDP contracting by 11.5 percent in the third quarter and by 7.1 percent in the fourth quarter.
Bhatnagar said the revised assessment was based on the renewed surge in COVID-19 infections, resulting to a grudgingly slow improvement in consumption.
“After initial success in containing the spread of COVID-19, the Philippines is now battling with a renewed surge,” Bhatnagar said.
The economist also cited the unprecedented fall in remittances due to the repatriation of overseas Filipino workers as unemployment rate surged to a record 17.7 percent as well as slow fiscal delivery.
Bhatnagar also cited the limited efficacy of monetary policy even if the Bangko Sentral ng Pilipinas (BSP) slashed interest rates by a cumulative 175 basis points to a record low of 2.25 percent so far this year and lowered the reserve requirement ratio.
Article and Photo originally posted by Philippine Star Global last August 18, 2020 12:00am.