PH economy seen shrinking 7.7 percent this year as virus keeps spending at bay: Security Bank

ABS-CBN News

Posted at Sep 25 2020 12:53 PM

Market-goers shop inside Nepa-Q-Mart in Quezon City on August 26, 2020. Mark Demayo, ABS-CBN News/File

MANILA - The Philippine economy is seen shrinking 7.7 percent this year as "most Filipinos continue to stay at home, spend only on essentials, and refrain from purchasing non-essential items," Security Bank said on Friday. 

In a webinar, Security Bank's Trust Asset Management Group said the country's gross domestic product could rebound 3.5 percent in 2021, and return to pre-pandemic levels buoyed by liquidity and timely actions by the Bangko Sentral ng Pilipinas, Security Bank said.

The Philippines fell into recession after a steep 16.5 percent drop in the second quarter. Hard lockdowns were imposed beginning mid-March to reduce the spread of COVID-19.

The Bangko Sentral ng Pilipinas has lowered interest rates, now at an all-time low of 2.25 percent.

“The good liquidity brought by the forceful response of the Bangko Sentral ng Pilipinas and low interest rates put the country in a good position for consumption rebound,” said Security Bank’s Trust and Asset Management Group chief investment officer Noel Reyes.

Consumer confidence is also expected to return once a vaccine is found, Security Bank’s president and CEO Sanjiv Vohra said.

The government earlier said the worse is over for the economy, but GDP is estimated to shrink 5.5 percent this year due to the COVID-19 pandemic.