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The Philippine Economy Could Decline by 4.5% in 2020

  • The latest forecast is worse than the -2 percent Moody gave in May and a decline from last year’s 6.2 percent.
  • Fitch Ratings earlier gave the Philippine economy a forecast of -4 percent, while S&P Ratings forecasted -3 percent for this year.
  • The central bank is now forecasting cash remittances to fall by 5 percent this year, a reversal from May’s 2 percent growth prediction as well as November’s 3 percent projection.
  • Visit The Financial Today’s homepage for more stories.

The latest forecast is worse than the -2 percent Moody gave in May and a decline from last year’s 6.2 percent. Meanwhile, the growth forecast for 2021 at 6.5 percent is slightly faster than the previous estimate at 6.4 percent.

Fitch Ratings earlier gave the Philippine economy a forecast of -4 percent, while S&P Ratings forecasted -3 percent for this year.

On the other hand, the government expects GDP this year to fall by 2 percent to 3.4 percent. The economy shrank by 0.2 percent in the first quarter on the effects of the eruption of the Taal Volcano, the coronavirus pandemic, and the ensuing mid-March lockout.

As of July 4, more than 68,000 OFWs have already been repatriated, data from the Foreign Affairs Department have shown.

The country depends heavily on cash remittances from OFWs, which supports consumption that makes up 70% of the economy. Owing to the pandemic and tensions in oil-producing countries, cash remittances fell by 4.7 percent to $2,397 billion in March.

The central bank is now forecasting cash remittances to fall by 5 percent this year, a reversal from May’s 2 percent growth prediction as well as November’s 3 percent projection.

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