IMF sees Philippine economy shrinking further by 3.6% in 2020

The Philippine economy will contract further this year due to the global economic disruption brought about by the COVID-19 pandemic, International Monetary Fund projections indicate.

In its World Economic Outlook update released Wednesday night, the IMF expected the Philippine’s gross domestic product (GDP) to shrink by 3.6% in 2020.

This latest IMF projection is a downgrade by 4.2 percentage points from its earlier forecast of 0.6% growth this year in its April report.

“This downward revision is mostly attributable to larger-than-expected supply disruptions related to COVID-19 and weaker demand in major trading partners,” IMF resident representative to the Philippines Yongzheng Yang said in an emailed response to questions raised over forecast.

Also, the forecast is worse than the government’s -2% to -3.4% projection.

In the first quarter of the year, the Philippine economy contracted by 0.2% —its weakest pace since 1998. 

“We now expect the resolution of COVID-19 to be more gradual, and hence the impact of the pandemic on the economy to be larger than previously anticipated,” Yang said.

“With the latest downgrade of the global outlook, the external environment for the Philippines has also worsened, posing additional headwinds to growth this year,” he added.

The IMF projects that the global economy will shrink by 4.9% this year. 

"The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast," the IMF warned.

Nevertheless, the IMF projected the Philippine economy will revert to growth by 6.8% in 2021.

Government economic managers expect that the country will recover next year with a GDP growth of 7.1% to 8.1%.

"This is in anticipation of the global economy’s sharp contraction as a result of the COVID-19 pandemic," the inter-agency Development Budget Coordination Committee said. —LBG, GMA News