## The Philippines ― Economic Outlook and Challenges

## Source details

**Canonical URL:** [The Philippines ― Economic Outlook and Challenges](https://www.imf.org/-/media/files/oap/oap-home/2020/phl-yyang-07302020.pdf)

## Other formats

- [Markdown version](/-/media/files/oap/oap-home/2020/phl-yyang-07302020.pdf.md)
- [Structured JSON version](/-/media/files/oap/oap-home/2020/phl-yyang-07302020.pdf.json)

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### Pre-pandemic performance
- GDP Growth by period:
  - 2001-05: 4.6%
  - 2006-10: 5.0%
  - 2011-15: 5.9%
  - 2016-19: 6.4%
- Inflation Rate by period:
  - 2001-05: 4.4%
  - 2006-10: 4.9%
  - 2011-15: 2.9%
  - 2016-19: 3.0%
- Unemployment Rate by period:
  - 2001-05: 11.4%
  - 2006-10: 7.5%
  - 2011-15: 6.8%
  - 2016-19: 5.4%
- Total NG Debt (as a % of GDP) by period:
  - 2001-05: 72
  - 2006-10: 60
  - 2011-15: 51
  - 2016-19: 43
- External/domestic composition noted (labels shown as "external" and "domestic")

### Impact of the pandemic and economic outlook
- WEO Forecasts (June 2020):
  - GDP Growth (percent):
    - 2020: -3.6
    - 2021: 6.8
  - Inflation (percent, end of period):
    - 2020: 2.1
    - 2021: 2.8
- Observed and expected impacts:
  - Sharp economic contraction in 2020
  - Rising unemployment and reduced household incomes, including from falling remittances
  - Financial pressures on corporates, especially SMEs
- Infection and testing dynamics:
  - Virus infection curve yet to flatten; testing capacity is increasing

### Economic impact larger and recovery slower than initially thought
- Factors for larger impact and slower recovery:
  - The impact of ECQ on Q1 growth was significantly larger than expected
  - Supply-side disruptions are still expected to be largest in Q2
  - Recovery will be slower due to:
    - More gradual resolution of the pandemic
    - Prolonged social distancing as the infection curve yet to be flattened
    - Larger scarring effects on the economy, e.g., loss of skills, bankruptcies
    - Weaker external demand due to downgraded global outlook, e.g. tourism

### Policy responses: fiscal and monetary
- Fiscal response:
  - Fiscal response in PHL is larger than during the GFC, and than many EMs, but lower than some peers
  - Targeted support measures include:
    - Increased resources for the healthcare sector, e.g., PPE procurement
    - Emergency income support for 18 million low-income households
    - Social protection measures for vulnerable workers, including for displaced and overseas Filipino workers
    - Credit guarantee for small businesses and support to the agriculture sector
    - Financial assistance for affected MSMEs and vulnerable households through specialized microfinancing loans and loan restructuring
- Monetary response:
  - As most EMs, PHL provided larger monetary accommodation than during GFC

### Recovery challenges and policy recommendations
- Key recovery priorities:
  - Mitigating scarring effects while meeting long-term development needs
- Recommended policy actions:
  - Strengthen social protection programs as temporary income support measures are phased out
    - E.g., expanding conditional cash transfer program
  - Infrastructure investment with short-term focus on jobs and social needs
    - E.g., projects already under construction, digital capacity, maintenance and repair projects
  - Provide greater support for MSMEs
    - E.g., corporate liquidity support and debt restructuring to address post-crisis debt overhang
  - Advance structural reforms that address both immediate and longer-term needs
    - E.g., national digital ID, tax reforms, further relaxation of FDI restrictions

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_Source: https://www.imf.org/-/media/files/oap/oap-home/2020/phl-yyang-07302020.pdf_