Philippine economy likely to contract further in Q2 — NEDA

The Philippine economy is likely to contract further in the second quarter of the year given the extension of the enhanced community quarantine (ECQ), according to the National Economic and Development Authority (NEDA).

On Thursday, acting Socioeconomic Planning Secretary Karl Kendrick Chua said economic growth in the second quarter is likely to weaken further from the 0.2% contraction registered in the first three months of the year.

"The first quarter, I think, is still respectable given the very difficult environment that we are in. Second quarter might be worse," he said in a virtual briefing.

This comes as the Philippine Statistics Authority (PSA) reported first-quarter growth at -0.2%, the first contraction of the local economy since 1998 when the country was hit by the El Nino phenomenon and the Asian Financial Crisis.

"Well, second quarter as I mentioned, will be difficult because we saw the full-month extension of the ECQ (enhanced community quarantine) in April," Chua explained.

Metro Manila and other "high-risk areas" have been been on lockdown since March 17, with the ECQ already having been extended twice until May 15.

Chua noted that with an ECQ, business operations only constitute 25% of normal operations in terms of people and value-added operations. Meanwhile, an general community quarantine (GCQ) is 75% of normal operations.

"The good news is, as of May 1, many areas of the country have moved to GCQ... What this means is that there is a chance that we minimize the expected contraction in the second quarter," he said.

The Philippine government earlier set an economic growth target range of 6.5% to 7.5% for the full year 2020, which Chua said will be kept for the meantime.

"A target is a target. If you move the target all the time then that's not the target, but the target stays," he said, but noted that this is unlikely to be achieved.

"I don't think we can dream of achieving our target of 6.5% by the end of the year, but as I mentioned, we can proactively use our policies and our readiness and our collective effort to achieve a respectable growth rate so that by the end of the year, we can actually hit a 0% baseline GDP growth or maybe better," added Chua.

Latest projections of the administration indicate that economic growth could range from -0.8% to a flat 0% this year. — RSJ, GMA News