The Philippine Economy Under a Microscope – Q1-2020

Posted on Posted in 2020-2021

Written by: Ma. Hanie Avery R. Andrade, Associate Vice President for Publications

Illustration by: Carlos Ramirez, Vice President for Creative Communications


This year has affected the Philippines in more ways than one. Not only has our Healthcare system been exhausted beyond imagination with the number of COVID-19 cases rapidly growing each day, but our economy has reached a record-breaking decline in its Gross Domestic Product [GDP] since the year 1981. In this four-part series, we will delve into the details of how and why our economy has reached its ups and downs in the year 2020. As in the field of economics, this article shall focus on the state of the economy and the factors that had affected it during the first quarter of this year [Q1-2020]. 

It all began with the Taal Volcano explosion. When this landmark had spewed ash on January 12, it not only affected the surrounding provinces but neighboring cities and regions as well (Esguerra & Cinco, 2020). At first glance, it’s easy to question whether or not a natural disaster such as this could have adverse effects on the economy. However, as we delve deeper into the details, we can say for sure that it did create an impact on both the regional and national economy, albeit minimal. 

The National Economic and Development Authority [NEDA] estimated the foregone income in economic sectors within a 14-km radius from the impact of the eruption was PHP 4.3 billion. This figure represents 0.17% of the 2018 CALABARZON Gross Regional Domestic Product [GRDP]. For sectors within a 17-km radius, the estimated income losses were at PHP 6.66 billion, which was 0.26% of the 2019 CALABARZON GRDP (Gatpolintan, 2020). 

From an inflationary standpoint, the effect of the calamity is minimal. The PSA reported the month’s national headline inflation at 2.9 percent, which was 0.4 percent higher than December 2019’s 2.5 percent rate. Region IV-A is known as one of the leading sources of livestock in the country, and with a decrease in the production and supply of produce, particularly pork and chicken, prices increased. Looking into specifics, the inflation of AONCR (areas outside NCR) had gone up by 3.0 percent in comparison to the previous month’s 2.4 percent. The food and non-alcoholic beverage commodity group were listed as those with the highest annual increase, with a 2.0 percent rise (2020). Given this data, the increase in both national and AONCR inflation rates could be attributed to the damages and troubles the calamity has had on the region. However, it is important to note that there are still other factors that must be taken into account.* 

To provide some assistance to those directly affected by this calamity, the Department of Social Welfare and Development [DSWD] provided a PHP 7.8 million assistance, based on a situation report from the agency itself dated January 18. (DSWD DROMIC, 2020). Aside from this, on January 29, they also provided PHP 13 million worth of augmentation support to the evacuees. “The assistance consisting of 29,043 family food packs (FFPs), 6,360 ready-to-eat-food, 1,870 sleeping kits, and 4,643 plastic mats as augmentation support based on the requests of the LGUs” (DSWD, 2020). Despite the estimated losses and millions of pesos spent on evacuee assistance, the impact was minimal on the economy. However, the same cannot be said for the thousands of Filipinos who had to flee their homes and evacuate to safety.

As safety concerns with the Taal Volcano slowly died down, a new problem arose in the latter half of the first month of the year. It was on the 30th of January that the first case of, what is now known as the COVID-19 virus, was found in the Philippines. A 38-year old Chinese woman who had arrived a few days before from Wuhan, China tested positive for the novel coronavirus (CNA, 2020). Shortly after, a 44-year old man that was in contact with the first discovered case of the virus passed away on February 2. This was known as the first n-COV related death in the country and outside of China (Ramzy & May, 2020). 

With the first few cases of the virus originating from the host country, it was only a matter of time that the first local transmission of the n-COV would be discovered. On March 7, the fifth case was confirmed to be the first case of local transmission when the Bureau of Immigration had verified the patient’s lack of recent travel history (DOH, 2020). With the newly announced presence of local transmissions, it became difficult to tell who was infected and who was not. Due to this, the number of infected cases grew each day, not just in our country, but also throughout the entire world. 

When the World Health Organization [WHO] declared the new novel coronavirus as a pandemic on March 11, the country’s attention and worry had slowly turned away from the Taal Volcano eruption (Ducharme, 2020). On March 12, the DSWD released a situation review once again regarding the assistance that was provided to those affected by the natural disaster. It was reported that a total of PHP 134,192,183.44 worth of assistance was provided to the evacuees. PHP 21.22 million was funded by the DSWD, PHP 107.34 million came from LGUs, and the remaining PHP 5.62 million was obtained from other private partners (DSWD DROMIC, 2020). 

On March 5, the Philippine Statistics Authority had released the January results of the Labor Force Survey. The employment rate was estimated to be at 94.7 percent, with unemployment only at 5.3 percent. Several regions were listed with high employment rates, the Cordillera Administrative Region topping the list at 97.2 percent (PSA, 2020). Despite these good numbers in the employment sector during the earlier months of the year and the economic impact of the Taal Volcano kept at a minimal level, these numbers will take a turn for the worse as the COVID-19 situation worsens in the Philippines. 

With the WHO’s declaration of the new coronavirus as a pandemic, it was definite that the number of cases of this virus was increasing at an alarming rate. As a way to slow down the transmission of the virus within affected areas, President Rodrigo Duterte imposed an Enhanced Community Quarantine [ECQ] over the island of Luzon and select provinces. This quarantine was meant to last from March 16 to April 14, which was later on extended more than once (Office of the President, 2020). 

Before this pandemic and the occurrence of the Taal Volcano explosion, from the years 2010-2017, the Philippines has had an average growth rate of 6.4 percent, a sign that the country’s growth performance has improved. Its potential growth rate has reached a 6.3 percent in the year 2017, which according to the Asian Development Bank, is the highest it has been in the last 60 years (2018). Despite the figures that show the Philippines’ economic growth as well as its potential for development, in the first quarter of 2020, the GDP has declined by 0.2 percent. This was the first contraction since the fourth quarter of the year 1998. This decline could have been caused by the strong lockdown during the last month of the quarter, even with the volcanic explosion that had taken place on January (Lim, 2020). Even if the lockdown had only taken place near the end of the first quarter, it was enough to create an impact on the economy, and it could have been considered as the “first step” towards the impending recession that was to hit the Philippine economy later on through the year.


*Note: The data gathered was based on the commodity’s Consumer Price Index [CPI].


This article switches between n-COV and COVID-19 to refer to the virus. During the first quarter, COVID-19 was known as n-COV during its early stages.



Business World. (2020, January 17). Taal eruption’s impact on inflation to be minimal — DoF.

Channel News Asia. (2020, January 30). Philippines confirms first case of new coronavirus: Health minister.

Department of Health. (2020, March 7). DOH CONFIRMS LOCAL TRANSMISSION OF COVID-19 IN PH; REPORTS 6TH CASE [Press release].

Department of Social Welfare and Development. (2020, January 29). DSWD sends augmentation assistance for Taal evacuees.

DSWD DROMIC. (2020, January 18). DSWD DROMIC Report #12 on the Taal Volcano Phreatic Eruption.

DSWD DROMIC. (2020, March 12). DSWD DROMIC Report #69 on the Taal Volcano Eruption.

Ducharme, J. (2020, March 11). World Health Organization Declares COVID-19 a ‘Pandemic.’ Here’s What That Means. Time.

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Lim, J.A. (2020). The Philippine Economy During the COVID Pandemic. ADMU Econ-ACERD.

Philippine Statistics Authority. (2020, February 5). Summary Inflation Report Consumer Price Index (2012=100): January 2020.

Philippine Statistics Authority. (2020, March 5). Employment Rate in January 2020 is Estimated at 94.7 Percent.

Philippine Statistics Authority. (2020, May 7). GDP declines by 0.2 percent in the first quarter of 2020; the first contraction since fourth quarter of 1998.

Office of the President. (2020). Memorandum from the Executive Secretary; Community Quarantine Over the Entire Luzon and Further Guidelines for the Management of the Coronavirus Disease 2019 (COVID-19) Situation. Author.

Overseas Security Advisory Council. (2020, April 06). Health Alert: Philippines, Government Identifies Several Community Quarantine Areas.

Ramzy, A., May, T. (2020, February 2). Philippines Reports First Coronavirus Death Outside China. New York Times.

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