Moody’s Analytics said it expects the Philippine economy to contract 1.8% in 2020, assuming no coronavirus second wave late in the year.
“[I]n our judgment the peak of the last economic expansion was January 2020, with the nadir of the recession in May 2020,” Mark Zandi, chief economist at Moody’s Analytics said in a report, “Handicapping the Paths for the Pandemic Economy” issued Friday.
The report contained an updated outlook for the Philippine economy in 2020 to a contraction of 1.8%, against a growth estimate of 4.9% issued in March. Before the outbreak, Moody’s Analytics had a base-case forecast of 6.9% growth in January.
The revised forecast is more upbeat than the 2% to 3.2% contraction in GDP expected by the government’s economic managers. First quarter GDP came in at minus 0.2%, the first contraction since the 3% drop in 1998 during the Asian Financial Crisis.
In 2019, the economy grew 6%.
According to Mr. Zandi, near-term recovery will depend on how quickly demand returns.
“This in turn depends on the collective psyche of businesses and consumers, and their willingness to invest and spend,” he said.
The Philippines is slowly easing restrictions, with parts of the country transitioning to more permissive forms of quarantine starting June.
Mr. Zandi warned that the pandemic may have caused long-term damage to the global economy.
“Even when the pandemic is over – after an effective vaccine or therapy for the virus is widely distributed and adopted – the global economic recovery will not be a straight line forward. There has already been too much structural damage to the economy,” he said. — Luz Wendy T. Noble
