Impacts of COVID-19 in the Philippines

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 Impact on the Economy (Economic Impact)

The hit to global growth is imminent, with a global recession possibly on the horizon. The Philippines will not be exempted from it.

Average global gross domestic product (GDP)  forecasts are around 0.9 percent for 2020, with the latest forecasts from  S&P  and  Capital  Economics at  1.0 percent and -1.0  percent, respectively.1  Bloomberg likewise presented four (4) scenarios for global growth —

1. China shock in which global GDP growth is at  2.9  percent; 
2. more outbreaks  with  2.3 percent global  GDP  growth;  
3. widespread contagion  with  1.2 percent global GDP growth; and 
4. global pandemic with 0.1 percent global GDP growth. 

Scenario 2 also assumes that there will only be “mild” recessions in Japan and the Euro Area. Similarly, in a March 2 report, the Organisation for  Economic Co-operation and  Development  (OECD)   suggested a  worst-case scenario of 1.5 percent global GDP growth for 2020. Global growth is seen to be primarily dragged down by direct effects of reduced demand and heightened uncertainty. They likewise estimated world trade to be significantly weaker, with a decline of 3.75 percent

Risks remain tilted to the downside,  with  Capital  Economics seeing a longer downturn for the global economy due to the following factors: (a) direct virus-related disruption that lasts longer than expected; (b) risk of lengthier recession or even another financial crisis as companies turn insolvent while central banks have limited monetary space,  resulting in higher unemployment and a further downturn in consumer spending.