No growth for Philippines in Q3, says Moody’s unit

MANILA, Philippines — The Philippines is the only country in the Asia-Pacific (APAC) region not expected to recover in the third quarter amid the long and strict lockdown to contain the outbreak of coronavirus disease 2019 or COVID-19 , Moody’s Analytics said.

Steven Cochrane, chief APAC economist at Moody’s Analytics, said the Philippines is expected to be a laggard in the region in terms of economic recovery.

“All countries within the APAC region are expected to enjoy a positive economic bounce in the third quarter except for the Philippines, which has suffered the longest and strictest lockdown in the region and whose count of COVID-19 cases has accelerated this month,” Cochrane said.

Malacañang placed the entire Luzon under enhanced community quarantine in the middle of March to prevent the further spread of COVID-19.

As a result, the economy stalled with gross domestic product (GDP) contracting by 0.2 percent in the first quarter, ending 84 straight quarters of positive growth or since the three percent contraction in the fourth quarter of 1998.

The Philippine economy last contracted in 1998 due to the Asian financial crisis.

This year, economic managers penned a GDP contraction of two to 3.4 percent, bouncing back with a growth of eight to nine percent next year.

Moody’s Analytics sees the country’s GDP contracting by three percent this year and recovering with a growth of about five percent next year.

Cochrane added in the report titled “If all the pieces fit: APAC recovery begins” that economic recovery is beginning for most countries in the region and would accelerate further next year.

“The pace of growth will depend upon the ending of economic shutdowns or partial restrictions, the acceleration of global demand to fire up regional supply chains, ending international travel restrictions, and continuing fiscal policy to support those most deeply harmed by the pandemic’s economic impacts,” he said.

Cochrane said risks to the outlook include an uncontrolled second wave of the pandemic in one global region that extends the global demand shock, weak global consumer and investor sentiment caused by delayed development and distribution of a vaccine, and continued sluggish trade patterns caused by geopolitical risk or public health policy that constrains trade.