Philippines Economic Update, December 2020 : Building a Resilient Recovery
The Philippine economy contracted by 10.0 percent, year-on-year, in the first three quarters of 2020, given the triple shock brought by the Coronavirus disease (COVID-19) pandemic. COVID-19 delivered a triple shock of a health crisis, strict contai...
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| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/983051607354214738/Philippines-Economic-Update-Building-a-Resilient-Recovery http://hdl.handle.net/10986/34899 |
| Summary: | The Philippine economy contracted by
10.0 percent, year-on-year, in the first three quarters of
2020, given the triple shock brought by the Coronavirus
disease (COVID-19) pandemic. COVID-19 delivered a triple
shock of a health crisis, strict containment measures, and a
global recession of unprecedented scale. The sharp
contraction in the second quarter was driven by the steep
dive in private domestic demand, deep contraction in public
investment activities, and the collapse of trade due to the
impact of strict containment measures domestically and
globally. Most of the country entered a more relaxed
community quarantine in mid-August with a gradual opening of
businesses and government operations. Yet, the economy
further contracted in the third quarter, albeit a modest
improvement from the peak of the outbreak. Moreover, the
country was hit by a series of strong typhoons which may
cause delay on the pace of the recovery as economic
activities were affected in some areas. This report will
feature disaster risk management (DRM) challenges the
country faces and policy recommendations to strengthen its
fiscal, physical, and social resilience. The severity of the
recession can be explained, first and foremost, by the
collapse in private consumption, as containment measures led
to a fall in employment and incomes. Private consumption
contracted by 8.2 percent, its worst performance on record.
This was in large part due to a combination of factors that
crippled domestic demand, including record-high
unemployment, declining incomes (including remittances),
movement restrictions that suppressed consumption, and a
historic decline in consumer confidence. The deepest
contraction was registered in the consumption of
non-essential goods and services and those that were
affected by the implementation of strict containment
measures, while essential goods such as food registered
small positive growth. In particular, the combination of
travel restrictions and weak consumer confidence which
weighed on demand, resulted in a collapse in domestic
tourism expenditures, which make up a fifth of private consumption. |
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