BSP exec eyes recovery starting Q3

July 28, 2020

An economic recovery is projected in the third quarter of 2020 following the easing of movement restrictions starting middle of May, a ranking Bangko Sentral executive said

“Because of the easing of the containment measure, we believe that this will present an opportunity for us to have some recovery particularly in the third quarter up to the first quarter of next year,” BSP Assistant Gov. Illuminada Sicat said in a virtual briefing.

Sicat added that “although it remains to be a weaker (output) as compared to 2019, but as compared to the first quarter and second quarter of the year, we see a U-shape in terms of recovery”.

Growth, as measured by gross domestic product, contracted by 0.2 percent in the first three months of this year, the first since the last quarter of 1998.

This, even as mainland Luzon was placed under the enhanced community quarantine only on March 17.

Before the ECQ, a community quarantine was declared over the National Capital Region starting March 15.

The ECQ lasted until May 15 for provinces in mainland Luzon but was extended until the end of May for Metro Manila as the number of coronavirus disease 2019 cases continued to rise.

The ECQ hampered economic activities since only necessary services were allowed to operate.

This greatly affected the country’s annual output since Luzon accounts for about 70 percent of GDP.

Authorities forecast deeper economic contraction in the second quarter since it is the peak of the ECQ, but they remain optimistic for a recovery in the third quarter.

Economic managers have revised their 6.5 percent  to 7.5-percent growth forecast for the economy this year to a contraction of between two percent to 3.4 percent.

However, GDP is seen to rise to between 8 to 9 percent in 2021 as the government implements its P1.7-trillion four-pillar recovery program.