The economic impact of the government’s nearly three-month strict lockdown measures over major areas of the country is seen deeper than expected, the National Economic and Development Authority (NEDA) said yesterday.
Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said their projected 3.4 percent economic contraction for this year will be reviewed to factor in the "more severe than expected” impact of the enhanced community quarantine (ECQ).
“What we are seeing actually from the latest data in April and May is that the impact of the ECQ was more severe than expected and you can see that in the trade data, in the manufacturing volume of production data, and also in employment,” Chua said during a virtual briefing.
According to Chua, a review of the government’s macroeconomic assumptions is necessary as the minus 3.4 percent gross domestic product (GDP) estimate for 2020 was based only data available last May 12.
“On the economy, the average growth for the entire year is expected to be minus 3.4 percent, and this is being reviewed as we see more data,” Chua said.
For the quarter ending June, Chua estimated that the GDP “will be worse” than the 0.2 percent contraction registered in the first three-months of the year.
“But we are also seeing based on the data that we are getting month-on-month gradual recovery, so it might be more negative in the second quarter and slightly improving in the coming in the last two quarters,” the acting NEDA chief said.
The Philippine Statistics Authority reported yesterday that the country’s total merchandise trade registered a slower decline of 38.7 percent in May, after a steep 59.5 percent drop in the previous month.
Breaking this down, merchandise exports dropped by 35.6 percent, while imports fell by 40.6 percent, year-on-year in May. Although still negative compared to last year, Chua said this represents slight improvements compared to last month.
Export of manufactured goods, which accounts for almost 80 percent of total exports, is also seen to gradually recover as the latest results of the Purchasing Managers’ Index (PMI) for the Philippines rose from 40.1 in May to 49.7 in June.
“The slower decline in trade performance is a welcome indication that economic activity has started to pick up with the relaxation of quarantine measures in certain areas, the gradual reopening of business, and the restarting of production in both the country and its trading partners,” Chua said.
The Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI) also indicated a gradual pick-up in semiconductors exports in the coming months and projected a flat growth in 2020.
“All of these are actually being reviewed and once we prepared the final budget proposal for 2021 there could be some adjustments so we are doing this as objective and as adaptive as possible,” Chua said. “Once we see the newest data we are going to of course revise our macroeconomic assumptions,” he added.