Official data showed on Thursday that the Philippine economy contracted at a slower pace in the fourth quarter of last year, but the economy experienced a record contraction for the whole year in 2020 as it grappled with the fallout from the Covid-19 pandemic.
The statistics agency said that gross domestic product shrank 8.3 percent in the December quarter compared to the previous year, compared to expectations of an 8.5 percent decline in a Reuters poll. The economy contracted 11.4% year on year in the third quarter.
For the full year of 2020, GDP contracted 9.5% – The largest contraction recorded is in the data series that began in 1946. It was also at the end of the government’s highest forecast of an 8.5% decline to 9.5% last year.
The economy suffered its first recession in nearly 30 years in the second quarter of 2020 as the country struggled to contain the Covid-19 pandemic. The Philippines has the largest number of coronavirus infections and Covid-19 deaths in Southeast Asia after Indonesia.
Private consumption remained weak. While the government has loosened restrictions on the supply side by allowing more public transportation and enterprises to operate, restrictions on the demand side, particularly the movement of children and families, prevented the return of private consumption stronger, “said Minister of Economic Planning Carl Chua during the briefing.
The government has relaxed coronavirus restrictions from the maximum level imposed in early 2020, but partial restrictions still apply in the metropolitan area with local cases reaching more than half a million and deaths topping 10,000.
The outlook for 2021 was “encouraging,” Chua added, reiterating the government’s previous forecast of 6.5% -7.5% growth this year.
Data on Thursday showed that the economy grew at a seasonally adjusted 5.6% quarter on quarter, slowing from 8% growth in the September quarter.
Government spending grew 4.4% year-on-year in the fourth quarter, while household spending decreased by 7.2%.
The Philippine central bank cut interest rates by 200 basis points last year in an effort to cushion the blow from the pandemic. Governor Benjamin Diocono told Reuters this month that the current accommodative monetary stance is sufficient to revive growth.