The Philippine economic contraction had likely bottomed out in May, the Asian Development Bank (ADB) said, but the nation’s recovery from a recession could be gradual as threat of a resurgence of coronavirus infections would remain until next year.
Kelly Bird, ADB country director for the Philippines said the country’s economic recovery from an estimated 2.3 percent to 5.3 percent contraction this year would be fragile until the COVID-19 pandemic is effectively contained.
While ADB expects the local economy would bounce back with a 6.5 percent growth next year, Bird admitted that there is still a lot of uncertainty in the short term.
“The quarter two contraction will clearly be a deep one,” Bird said without providing figures. “But worse is most likely over now with the gradual opening of the economy.”
But Bird also said that there are some industries of economy that will take longer to recover, like tourism, segments of retail and services, private educators, among others.
He is also not ruling out the possibility that the Philippines’ economic recovery could suffer a setback as Metro Manila and other urban areas may still revert to strict movement restrictions amid high COVID-19 transmissions.
“They may have to go down to a much stricter one to be able to contain it,” Bird said. “We do expect more of these over the next six to 12 months globally, but probably be much more localized. And the reality is that the Philippines will experience that as well.”
These series of lockdowns, which aim to ultimately suppress the virus, would delay and slow the economic recovery in the short-term, Bird said.
“When you do place lockdowns, it’ll slow the commencement of the recovery in the short term, but I think economies can be much stronger in the longer term by ensuring that they do contain and suppress the virus,” he added.
While the economic contraction had bottomed out in May, the ADB estimated that unemployment rate deepened further in June to 22 percent from 17.7 percent in April.
But Bird said that unemployment will start to improve in the second-semester of the year as the economy gradually reopens.
“A lot of those workers have gone back to work. We would expect now that that will start to decline, so our projections would be next year, it should fall below 10 percent and continue to decline with economic growth,” Bird said.
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