"How is 2020’s final quarter likely to run out?"
"How is 2020’s final quarter likely to run out?"
With the recent release of the Philippine Statistics Authority of its report on the third-quarter gross domestic product, the shape of the Philippine economy’s all-of-2020 performance has become discernible. PSA reported on November 10 that the Philippine economy contracted by 11.3 percent in the July-to-September quarter.
The third-quarter contraction was an improvement over the economy’s performance in the immediately preceding three months. PSA reported a 16.4-percent GDP contraction in that quarter, which saw the placement of the Philippine economy’s principal production centers—National Capital Region and most of Calabarzon—under a very tight quarantine regime for one month. There was virtually no public transportation and the manufacturing and service industries that were allowed to operate—industries deemed “essential”—were allowed to do so on the basis of limited capacity use. By the time the Expanded General Community Quarantine was lifted, the damage to the economy had been done.
Although increasingly worrisome reports of the deadly coronavirus had started to filter in from China at the start of 2020, it was not until March 14 that the Duterte administration concluded that strong defensive measures needed to be taken urgently. On that date, President Duterte ordered the enforcement of a lockdown on NCR and Calabarzon. With all but its last two weeks lockdown-free, 2020’s first-quarter was able to post a 0.9-percent GDP growth.
Then came the second quarter and the draconian restrictions and limitations imposed by EGCQ and its successor, the less severe GCQ. The preceding quarter’s minimal growth quickly turned into the nightmarish 16.4-percent contraction during the April-to-June quarter.
With the termination of EGCQ and the gradual increase in the industries allowed to reopen, an improvement, however modest, in the economy’s performance was to be expected during the third quarter. Pre-September Surveys of economists’ third-quarter GDP expectations indicated a preponderance of sanguineness about the economy’s immediate prospects, with most of the respondents expecting a GDP contraction of less than 10 percent. PSA’s third-quarter GDP figure has shown them to have overestimated the impact on GDP of the lockdown-easing that has occured in recent weeks.
How is 2020’s final quarter likely to run out? At this point, the quarter is almost at halfway-point and the Philippine economy is still under lockdown.
The government has announced that, barring a significant improvement in the COVID-19 situation, NCR and most of Calabarzon will remain under a GCQ regime until the end of the year. That certainly does not bode well for the economy’s full-year GDP.
One can probably say with a fair amount of confidence that the worst of the pandemic is past for the Philippines—provided, of course, that there is no major adverse change in the COVID-19 equation.
A 0.9-percent growth in the first quarter, a 16.4-percent contraction in the second quarter and an 11.3-percent contraction in the third quarter. From these quarterly numbers, it is not overly difficult to arrive at an estimate of this country’s full-year GDP.
