Philippine economy contracts in Q2 as Covid lingers

[MANILA] The Philippines' economy fell back into contraction in the second quarter compared to the previous three months, as elevated numbers of Covid cases and extended lockdowns place the nation among Asia's laggards.

Gross domestic product (GDP) shrank a seasonally adjusted 1.3 per cent in April-June from the previous quarter, the country's statistics agency said, compared to the 1.1 per cent contraction expected by economists surveyed by Bloomberg. That was down from 0.3 per cent growth on a sequential basis to start the year.

During the quarter, Southeast Asian economies from Indonesia to Vietnam began facing severe Covid outbreaks fueled by the more contagious delta variant. In the Philippines, where the main economic hub around the capital has been under repeated lockdowns, the official 6-7 per cent GDP growth estimate for this year will likely come under review.

Compared to a year earlier, GDP rose 11.8 per cent, the statistics authority reported Tuesday, the fastest growth since 1988. That beat the 10.9 per cent median growth among analysts surveyed, but was flattered by comparison to the record contraction a year ago amid a long and harsh lockdown.

The Philippine central bank, which holds its policy meeting Thursday, could hint of further easing to help an economy that analysts expect to be among the slowest in the region to recover from the pandemic.

BLOOMBERG