MANILA, Philippines — Gross Domestic Product has contracted in the Philippines during the fourth quarter of 2020, yielding a -9.5% contraction across the entire year. This is a vast change from last year’s growth, which saw 4 successive quarters of 5%+ growth.
According to the Philippines Statistics Authority (PSA), agricultural, forestry, and fishing recorded a -2.5% growth rate in Q4, whilst services and industry recorded a -8.4% and -9.9% growth rate respectively.
Accommodation and food services were among the worst-hit industries with both recording over 40% contractions.
2020’s GDP plunge in the Philippines is the largest on record since 1946, even topping the mid-1980s crash. Economic Planning Secretary Karl Chua states, “Without doubt, the pandemic and its adverse economic impact are testing the economy.” Yet, Chua claims the nation is seeing early signs of recovery with restrictions of movement lessening.
Stocks are seeing growth again in Manilla, suggesting that larger companies may be experiencing a better recovery than small companies – not least because of having better access to credit and capital.
Given that small and medium-sized enterprises (SMEs) account for 99% of registered businesses in the Philippines, along with providing 60% of the nation’s jobs, most workers and business owners are heavily affected by the current economic turbulence caused by lockdown measures.
Will COVID stand in the way of growth in 2021?
Despite being one of the fastest-growing economies in the world, the Philippines are struggling to dig its way out of recession. Analysts believe the first quarter of 2021 will be another GDP contraction, thus remaining in recession.
Vaccines could be key to economic recovery, as they will allow a loosening of social distancing and movement restrictions. Such measures have been a primary factor in limiting economic activity with tourist money drying up, as seen with the ban on inbound flights from Britain, and advice for citizens to “stay at home”.
Significant fiscal or monetary stimulus isn’t expected, according to a senior economist at ING Bank in Manilla. Nicholas Mapa suggests the central bank is out of ammunition due to the rate cuts and a conservative approach to spending is taken by the government.
Source : https://business.inquirer.net/317553/how-will-small-businesses-recover-in-the-philippines