The Philippine economy remained in recession in the first quarter of 2021 as it shrank 4.2%, its fifth consecutive quarter of decline amidst continuing restrictions due to the COVID-19 pandemic
The GDP contraction is faster than the 0.7% decline in the first quarter in 2020 but better than the 8.3% drop in the fourth quarter of last year
Philippine economic managers estimate the economy to grow by 6.5% to 7.5% in 2021 and by 8% to 10% in 2022
The Philippine economy remained in recession in the first quarter of 2021 as it shrank 4.2%, its fifth consecutive quarter of decline amidst continuing restrictions due to the COVID-19 pandemic.
The contraction in gross domestic product is faster than the 0.7% decline in the first quarter in 2020 but is an improvement from the 8.3% drop in the fourth quarter of 2020.
The Philippines has the longest-running lockdown in the world, which started in March 2020 and resulted in a GDP contraction of 9.6% last year, the country’s sharpest annual dip on record since 1946.
According to the Philippine Statistics Authority, the main contributors to the decline in the first quarter of 2021 were construction (-24.2%), other services (-38%), and real estate and ownership of dwellings (-13.2%).
On the production side, industry, services, and agriculture, fishery and forestry all declined, sagging by 4.7%, 4.4%, and 1.2%, respectively.
On the demand side, household consumption shrank 4.8% while imports and exports likewise decreased by 8.3% and 9%, respectively. Government spending, on the other hand, grew 16.1%.
“The country’s strong economic position before the pandemic and improving economic data in recent months point to an economy that is on the mend,” Socioeconomic Planning Secretary Karl Chua said in a virtual press briefing.
Chua noted that while the re-imposition of enhanced community quarantine (ECQ) and modified ECQ in the National Capital Region and neighbor provinces since March will pose a downside risk to growth, policy actions in the next eight months “can reverse these initial losses.”
He said these policy actions include the safe reopening of the economy, full implementation of the government’s recovery package, and acceleration of the vaccination program.
In December 2020, the Development Budget Coordination Committee estimated that the economy would grow by 6.5% to 7.5% in 2021 and by 8% to 10% in 2022.