The Philippines posted its worst economic performance on record last year after the coronavirus pandemic crippled consumer spending and business activity.
The Philippine Statistics Authority reported on Thursday that the local economy, as measured by its gross domestic product (GDP), sank by 9.5 percent in 2020.
The full-year negative growth is the nation’s steepest post-war contraction based on available PSA data dating back to 1947.
It is also at the low-end of the government’s revised target for 2020 of minus 8.5 percent to minus 9.5 percent.
In contrast, the economy expanded by 6.0 percent in 2019.
“COVID-19 disrupted our growth momentum and development trajectory,” Acting Socioeconomic Planning Secretary Karl Kendrick Chua said, noting the implementation of the community quarantines took a heavy toll on the country.
In October to December alone, the economy slumped by 8.3 percent, compared to 11.4 percent in the third quarter and 16.9 percent in the second quarter.
However, the final three-month GDP figure was a reversal of the 6.7 percent growth in the same period in 2019.
Based on the PSA data, the negative growth in the fourth quarter was mainly due to weak construction sector, which dropped 25.3 percent, along with other services at minus 45.2 percent as well as accommodation
and food service activities at minus 42.7 percent.
All three major economic sectors likewise posted contractions during the quarter with agriculture by 2.5 percent, services by 8.4 percent, and industry by 9.9 percent.
On the demand side, private consumption, which comprises some 70 percent of GDP, remained weak with a minus 7.2 percent growth.
The annual family income also declined by an average of P23,000 per worker last year, depending on sectors and jobs. Some workers were hit much harder, while others lost their jobs completely.
Investments, meanwhile, declined by 29 percent in the four-quarter, but at a much slower pace compared with minus 41.6 percent in the previous quarter.
While the government’s infrastructure spending was 10 percent higher against the programmed levels in October to December 2020, the actual disbursements were 32.5 percent lower compared with the previous year.
On the external account, exports weakened by 10.5 percent in the fourth- quarter, at slower compared with 14.4 percent in July to September.
Despite the disappointing GDP data for last year, Chua said the prospects for 2021 are encouraging.
“With the continuous calibrated reopening of businesses and mass transportation, and the relaxation of age group restrictions, we will see more economic activity in the months ahead,” Chua said.
“This will lead to a strong recovery before the end of the year, when the government will have rolled out enough vaccines against COVID-19 for a majority of our people,” he added.
The Development Budget Coordination Committee (DBCC), an inter-agency body that sets macroeconomic and fiscal assumptions of the government, is expecting the local economy will grow by 6.5 percent to 7.5 percent this year.
“Efforts to increasingly open the economy while taking resolute steps
to fast-track the vaccination program and keep the COVID-19 caseload to the lowest level possible, would boost business and consumer confidence that are crucial to a robust economic recovery,” Chua said.
“All of these efforts to contain the coronavirus and revive the economy will allow us to prevent long-term economic scarring and productivity losses and recover to the pre-pandemic level by mid-2022,” he added.
The DBCC is targeting to grow the economy by 8.0 percent to 10 percent in 2022.