PH growth forecast cut to 4% due to COVID-19 menace

MANILA, Philippines — The economic growth forecast for the Philippines was further slashed  by Fitch Solutions to up to four percent this year from the previous six-percent forecast due to the month-long Luzon-wide enhanced community quarantine due to the coronavirus disease 2019 (COVID-19) situation.

“We have revised down our growth forecast for the Philippines from 6.0% to 4.0% following lockdowns announced by President Rodrigo Duterte over the course of March,”  it said in a research note issued on Tuesday.

This is even lower than the eight-year low of 5.9 percent that the country has recorded in 2019.

READ: Fitch Solutions slashes growth forecast for PH to 6%
 

Over the entire Asia, Fitch Solutions forecast the economic growth to an average of only 1.9 percent in 2020 from 4.3 percent in 2019 due to the global pandemic triggered by COVID-19, marking the slowest pace of growth since the global financial crisis in 2009.

The think tank noted that following its growth forecast revision for China, where the virus first broke out in late 2019, from 4.2 percent to 2.6 percent, it is also expecting a slow economic growth in Asia as a whole.

“The combination of a significant slowing in China, rising risks of widespread domestic outbreaks, along with financial market stress and weakening external demand, will weigh heavily on growth across the region,” the research said.

“We not only continue to see further downside risks to growth but are also concerned by potential instabilities caused by large stimulus measures that could hamper a medium-term growth recovery,” it added.

Fitch Solutions pointed out that the number of confirmed cases in mainland China no longer compose the vast majority of cases of infection globally—a comparison that it said has significantly darkened its outlook for global growth over the next few quarters.

The think tank said that previously, the “core scenario” was that the outbreak will be contained within China and that the growth impact will only emerge from “extraordinary lockdowns China has had to install in order to bring the situation under control.”

It noted that initially, cases outside China were relatively low in scope and are often related to visitors from China.

“However, since March, that narrative has rapidly changed as the epicentre of the crisis has now moved away from China to Europe and the US with a greater number of COVID-19 cases and deaths emerging outside of mainland China,” it added.

GSG