MANILA -- The Philippines ended the pandemic year of 2020 with its worst economic performance since the country began releasing growth data just after World War II in 1947, in what officials say is a consequence of policies to save lives during the COVID-19 crisis.
The country's gross domestic product shrank 9.5% last year -- the first annual contraction since 1998 -- a year after the Asian financial crisis erupted, the Philippine Statistics Authority reported on Thursday.
The data, which represents the low-end of the country's minus 8.5% to minus 9.5% target range, eclipses the prior record contraction of 7.0% in 1984 when the Southeast Asian nation plunged into economic and political crises during the final years of the Ferdinand Marcos dictatorship.
"The year 2020 will be remembered as the most difficult year in our lives," President Rodrigo Duterte's economic team said in a joint statement read by Acting Socioeconomic Planning Secretary Karl Chua during an online briefing. "The road ahead remains challenging, but there is now light at the end of the tunnel."
Fourth-quarter GDP shrank 8.3% year-on-year, moderating from a contraction of 11.4% in the third quarter. On a seasonally adjusted basis, the economy grew 5.6% in the fourth quarter from the third.
Quarterly economic decline bottomed at a record 16.9% fall in GDP in the second quarter, a period that covered the most intense period of coronavirus lockdown.
"The government made a difficult decision of imposing community quarantines as it put premium on saving lives and protecting the communities from the virus while beefing up our healthcare capacity," Chua said. "[These policies] came at a huge cost to the economy and the people."
Household spending, a key economic driver for the country with an estimated population of 109 million, contracted by 5.7% last year as millions lost jobs during the pandemic.
The country also suffered economic fallout from the eruption of the Taal volcano in January last year and devastating typhoons in the fourth quarter.
Large parts of the Philippines have been under varying degrees of lockdown since mid-March as the country struggled to contain the virus.
The Philippines has the second-highest number of COVID-19 cases in Southeast Asia, after Indonesia. As of Wednesday, the country had 518,407 cases, with more than 1,000 daily new cases for the past three weeks and 10,481 deaths.
On Monday, Duterte reimposed stay-at-home orders for children aged 10 to 14. Businesses had hoped eased restrictions would spark more economic activity, but fears over a more contagious strain of the virus forced the imposition stricter rules again.
Duterte's economic team expects the economy to grow 6.5% to 7.5% this year due to further reopening of the economy and as coronavirus vaccinations begin.
"The Duterte administration's efforts to increasingly open the economy while taking resolute steps to fast-track the vaccination program and keep the COVID-19 caseload to the lowest level possible, would boost business and consumer confidence that are crucial to a robust economic recovery," Chua said.
But at least one analyst expects a slower recovery. Nicholas Antonio Mapa, a senior economist at ING Bank Manila, said 2021 growth will likely settle at 4.9%. Contraction will likely extend into the first quarter with much of the country still under partial lockdown, Mapa added.
"Household spending will remain lackluster as unemployment levels close in on 5 million and inflation begins to rise and whittle down what little purchasing power is left," he said. "Outside the base effect-induced bounce in [the] second-quarter, we do not see any significant buildup in momentum in the near term."