London-based Capital Economics said that the Philippines’ gross domestic product (GDP) likely slid by almost a fifth year-on-year during the second quarter at the height of the longest and most stringent coronavirus disease 2019 (COVID-19) lockdown in the region.
The rise in coronavirus disease 2019 (COVID-19) cases both locally and abroad was the main drag on market sentiment. COVID-19 cases in the Philippines reached 80,448 as of Sunday. Malacañang had previously warned quarantine rules may be tightened again if the tally hits 85,000 by end-July.
“Countries heavily dependent on tourism, such as Thailand, or which experienced long lockdowns like the Philippines, will have seen GDP fall 15-20 percent year-on-year last quarter,” Leather said in a July 24 report titled “Rupiah worries resurface, Korea’s ‘modest’ slowdown.”Capital Economics senior Asia economist Gareth Leather said.
In a July 21 report, Barcelona-based FocusEconomics also further lowered its 2020 GDP forecast for the Philippines to 3.9-percent decrease from 3.2 percent in June due to “a sharp recession in the second quarter.”
“Plunging remittances, evaporated tourism and foreign demand, a weak labor market and business closures in the wake of the pandemic are seen causing GDP to plunge this year, after eight years of growth above 6 percent. That said, a ramp-up in fiscal and monetary stimulus should cushion the downturn somewhat,” FocusEconomics said.
Current estimates show the Philippine economy will contract by 15% by end-2020, which means it would shrink back to its size in 2016.
The government will have to take some drastic measures to keep the economy from declining so much. Failure to address these concerns may draw a lack of confidence from investors.
The State of the Nation Address of President Rodrigo R. Duterte on Monday will also drive market sentiment this week, as it is expected to shed light on several uncertainties regarding the recovery plan of the battered economy.
Immediate support for the benchmark index is placed within 5,800-5,900 and resistance within 6,100-6,200.
Read More: Inquirer ;
-Stockbytes PH, July 23, 2020,
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