You are here: Home » International » News » Economy
Business Standard

Philippines economy shrinks in third-quarter, govt says 'worst is over'

GDP grew a seasonally adjusted 8% quarter-on-quarter, after a 14.9% contraction in April-June

Topics
Philippines | economy

Reuters  |  MANILA 

economy, growth, gdp, coronavirus
The data showed household spending and investment continued to suffer while government spending slowed. Illustration by Binay Sinha

By Neil Jerome Morales and Enrico Dela Cruz

MANILA (Reuters) - The Philippine shrank by more than expected in the third quarter from a year ago as the COVID-19 pandemic continued to batter the Southeast Asian country but a loosening of curbs helped ease the pain.

Gross domestic product (GDP) shrank 11.5%, the statistics agency said on Tuesday, after a 16.9% slump in the second quarter when the entered its first recession in nearly 30 years. Economists in a Reuters poll had forecast a 9.8% year-on-year contraction.

GDP grew a seasonally adjusted 8% quarter-on-quarter, after a 14.9% contraction in April-June.

The government has gradually lifted curbs since May after imposing one of the strictest lockdowns globally this year. But analysts worry about the Philippines' outlook as it struggles to contain the virus at home, while a resurgence of cases abroad threatens the global economic recovery.

"The economic team is optimistic that the worst is over for the country," said Acting Economic Planning Secretary Karl Chua, projecting a "strong bounce-back" in 2021.

The data showed household spending and investment continued to suffer while government spending slowed. Household spending fell 9.3% in the third quarter from the year before and investment slumped 37.1% over the same period.

"Improvements are likely to be harder to come by in the quarters ahead," said Alex Holmes, Asia economist at Capital Economics. "With the virus still not under control, a further scaling back of containment measures will take longer."

HSBC economist Noelan Arbis expected the central bank to keep rates steady for the rest of 2020, but ING senior economist Nicholas Mapa said the data could prompt a knee-jerk move.

The central bank cut interest rates by a total of 175 basis points this year while the government has launched 165.5 billion pesos ($3.4 billion) worth of stimulus measures.

"With fiscal authorities pulling back on spending at a time we need it the most, monetary authorities may be compelled to trim rates but at this point, it may be the less effective response," ING's Mapa said.

Government spending rose 5.8% in the third quarter from a year ago, compared with a 21.8% surge in the second quarter.

The has the second-highest number of cases and COVID-19 deaths in Southeast Asia.

 

(Reporting by Neil Jerome Morales and Enrico Dela Cruz; Editing by Ana Nicolaci da Costa)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, November 10 2020. 10:57 IST
RECOMMENDED FOR YOU
.