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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest GDP figures in the Philippines during the second quarter.

Key Quotes

“Real GDP fell more than expected by 16.5% y/y in 2Q20 (1Q20: revised to -0.7% y/y from -0.2% y/y), marking the worst quarterly performance on record and weaker relative to regional peers. It was primarily attributed to the adverse impact of COVID-19 pandemic-induced enhanced community quarantine (ECQ) in the country since mid-March and falling overseas remittances, which markedly weighed on services sector, industrial activities, investments, and household spending.”

“The second wave of COVID-19 infections is expected to stall the recovery pace, with new cases rising more than six-fold recently. This alongside persistent weakness in overseas remittances and domestic employment is likely to keep domestic demand subdued. Taking into account these negative factors and sharper decline in 1Q-2Q GDP, we trim our 2020 full-year GDP target to – 5.5% (from -3.5%). Post 2Q20 GDP release, the Philippine government has also downgraded its GDP projection to -5.5% for 2020 (from a range of -3.4% to -2.0%) and lowered next year’s growth target to 6.5%-7.5% from 8.0%-9.0%(UOB forecast: +7.0%).”