MANILA – Economic impact of the coronavirus disease 2019 (Covid-19) on the Philippine economy is expected to slow down domestic expansion, with Fitch Solutions cutting its 2020 growth projection from 6 percent to 4 percent.
In a report dated March 20, 2020, the unit of Fitch Group said its growth projection is the slowest for the country since 2011, referring to the 3.7-percent output that year.
Earlier, Fitch Solutions traced the risks to growth of tourism, remittances, supply-chain disruption, and weaker foreign direct investments (FDIs) after stoppage of production and exports from China due to the Covid-19 epidemic that started from Wuhan, China last December.
“While these transmissions channels are still in place, we now believe that the most significant drag on growth will come from quarantine measures in the country following a severe outbreak,” it said.
The government placed Luzon, the country’s largest island group, under enhanced community quarantine from March 17 to April 12 to contain the rise of Covid-19 cases.
This was done two days after Metro Manila was placed under community quarantine to address the rise of Covid-19 cases.
Fitch Solutions said its decision to cut the growth forecast for the Philippines was in line with its global economic outlook, which “has become more pessimistic.”
“We now expect a sharper downturn, exacerbated by the tightening of global financing conditions,” it said.
The report said the combination of these headwinds will cap domestic demand and investment, as well as export activity over the coming quarters.
“However, we do think that fiscal stimulus will play a large role in supporting the economy and a pipeline of public infrastructure projects will help support a rebound once the outbreak is contained,” it said.
Last week, the government announced a PHP27.1-billion stimulus program for the affected sectors.
The Bangko Sentral ng Pilipinas (BSP) has also announced its decision to tie-up with the Bureau of the Treasury (BTr) to purchase up to PHP300 billion worth of government securities with a maximum repayment period of six months.
Proceeds of the debt paper sale will be used to augment government funds intended for Covid-19-related programs. (PNA)
