The research arm of debt watcher Moody’s Investors Service is projecting an 8-percent dive in the Philippines’ gross domestic product (GDP) during the second quarter of 2020 largely as a result of one of the world’s most stringent COVID-19 lockdowns being enforced in the country.
Steven G. Cochrane, Moody’s Analytics chief Asia-Pacific economist, said the debt watcher changed the earlier forecast of 2.5 percent decline in GDP from April to June because “very weak data on manufacturing production, exports and movement indicators have led us to revise our expectations.”
“The 8-percent decline is more in line with the most recent high-frequency data,” Cochrane said.
The government will report on the second-quarter GDP performance on Thursday (Aug. 6) which could only validate what economic managers had feared—the economy shrank at a faster pace than 0.2 percent during the first quarater.
Cochrane, however, said Moody’s Analytics sees light at the end of the tunnel as it expected GDP to “rise on a quarter-to-quarter basis in the third quarter, bringing the recession to end.”
“But this is based on the assumption that the community quarantines will continue to be eased in coming weeks,” Cochrane said.
“The current path of COVID-19 infections, however, puts the risks to this forecast clearly on the downside,” Cochrane said.
Cochrane’s assumptions, however, could change drastically.
On Sunday (Aug. 2) night, President Rodrigo Duterte approved a plea by Philippine health professionals to bring restrictions back.
Duterte ordered modified enhanced community quarantine (MECQ), from the less-stringent general community quarantine (GCQ) at present, in Metro Manila and Bulacan, Cavite, Laguna and Rizal provinces.
Doctors, nurses and other health workers on the forefront of the fight against COVID-19 had called for a “timeout” in reopening the economy as COVID-19 cases surged when at least 3/4 of the economy had started to open in June.
The MECQ period would last from Aug. 4-18.