Philippine economy could contract in 2020 due to coronavirus outbreak

March 24, 2020 - 2:32 PM
A view of Bonifacio Global City in Taguig, considered one of the country's central business district. (The STAR/Paulo Alcazaren)

MANILA—Philippines said that its economy could contract for the first time in more than two decades this year due to the fallout from the coronavirus pandemic.

The economic planning agency said on Tuesday growth drivers like consumption, tourism and trade will take a hit with half of the country’s population under lockdown, while strict travel restrictions remain in place.

Growth this year could be between -0.6% to +4.3% without mitigating measures, the agency said, adding the estimates assumed that the adverse impact of the fast-spreading virus will be felt until June.

The agency said hitting the upper end of the forecast would only be possible if Philippines is able to stem the impact of the coronavirus and strict home quarantine measures to the rest of the economy.

The government has set a 6.5%-7.5% growth target for the year.

The Philippine central bank announced a 200 basis points reduction in the reserve requirement ratio (RRR) of banks on Tuesday, just a few days after it opted for a deeper-than-expected 50 bps cut in policy rates to counter the economic blow of the virus.

It also approved on Monday a 300 billion pesos ($5.87 billion) program to support the government’s fight to stave off the impact of the virus, which has killed 33 people and infected 501 in the country. ($1 = 51.1000 Philippine pesos). —Reporting by Karen Lema; Editing by Kim Coghill and Amy Caren Daniel