The Philippines fell into recession in 2020, like many other nations in the world, as the COVID-19 pandemic stopped virtually all economic activity. The country’s Gross Domestic Product (GDP) fell by 16.5 percent in the second quarter of April-May-June from the previous year, the biggest slump since GDP recording started in 1981.
Manufacturing was down by 21 percent; construction, down by 33.5 percent; transportation and storage, down by 59.2 percent; industry and services, down by 22.9 percent; services, down by 15.8 percent; household expenditures, down by 15.5 percent; exports and imports, down by 37 and 40 percent, respectively. Among the major economic sectors, only agriculture, forestry, and fishing recorded growth and this was by only 1.6 percent.
That was at the height –rather the depth – of the country’s recession in the middle of 2020.
This week, the Philippine economy was reported recovering from its recession. Finance Secretary Carlos Dominguez III cited the swift enactment of two administration measures—Bayanihan 1 and 2 – which beefed up healthcare infrastructure and, at the same time, extended emergency subsidies to dislocated workers and provided relief to businesses. The Bangko Sentral ng Pilipinas (BSP) responded to the crisis with measures to buoy market confidence and ensure sufficient liquidity and efficient functioning of the financial system, said BSP Governor Benjamin Diokno.
The Philippine economy is now expected to swing from the recession of 2020 to growth of 6.5 to 7.5 percent in the new year 2021 – to 8 to10 percent next year 2022. Growth will be supported by government spending under the just-approved National Budget of P4.506 trillion – 10 percent higher than the previous year’s budget.
The Philippines has maintained its standing in the international financial community, with Fitch Ratings maintaining its “BBB” credit rating for the country. Fitch has downgraded its ratings for many countries in the midst of the pandemic, including Mexico, Italy, and Colombia, which used to have the same rating as the Philippines but have now been downgraded to “BBB.”
Fitch also expects the Philippines to achieve economic recovery this year, projecting its growth at 6.9 percent in 2021 and at 8 to 10 percent in 2022.
The world, including the Philippines, continues to be threatened by the COVID-19 virus, but the Philippines is doing relatively well in keeping its cases down. As for the COVID’s economic impact, we have great confidence in our country’s recovery, as shown in the reports of the Department of Finance and the Bangko Sentral and the highly positive assessment of Fitch Ratings.