The Philippine economy shrank at a slower pace in the third quarter of 11.5 percent still due to the impact of the coronavirus disease 2019 (Covid-19), indicating a recovery in the coming quarters.
The government reported on Tuesday the country’s gross domestic product (GDP) slide eased in the July to September period from a contraction of 16.9 percent in the second quarter.
“(This) indicates that the economy is on the mend. The path is clearer to a strong bounce-back in 2021,” acting Socioeconomic Planning Secretary Karl Kendrick Chua said during a virtual press conference. “The economic team is optimistic that the worst is over for the country.”
Chua is bullish about economic growth in the fourth quarter, citing easing restrictions on businesses and transportation while enhancing the implementation of the minimum health standards.
“So all of these suggest that the trajectory is better in the fourth quarter compared to the first two quarters despite the contraction that we saw in those two preceding quarters,” he said.
Chua also believed that impact of typhoons on economic growth will be manageable.
He particularly cited typhoons or storms – Pepito, Quinta, Rolly and Siony – that resulted in P38.8 billion in damages or 0.21 percent of the country’s GDP.
“Our GDP is almost P18 trillion so when we put them all together, the impact on the country’s growth rate preliminary is around a reduction of around .055 percentage point so I think this is a manageable level. What is important is we fast-track the recovery so that more people will be reintegrated back after the disaster phase,” he added.
But Chua said the Development Budget Coordination Committee (DBCC) will be meeting immediately to reassess the latest numbers to “see if there is a need to adjust the full-year projections.”
The GDP growth rate averaged -10 percent in the first three quarters of 2020, lower compared to the government’s full-year forecast of -5.5 percent.
Chua said the still double-digit contraction in the third quarter did not come as a surprise given the return of stringent quarantine measures in National Capital Region, adjacent provinces, and Cebu City, which account for around 60 percent of the Philippine economy.
On the supply side, agriculture growth slowed to 1.2 percent, as the sector faced a number of plant and animal diseases. These headwinds, however, had minimal effects on overall food supply as evidenced by falling food inflation in the same period.
Both industry and services also showed a smaller contraction, consistent with the initial recovery of employment, where some 7.5 million workers returned in the third quarter.
On the expenditure side, smaller contractions were recorded in household consumption, firm investment, exports, and imports. This signals that households and firms are recovering. SOVEREIGNPH