A series of unforeseen events caused an abrupt halt to the Philippines’ strong growth momentum in early 2020. As a result, the Philippine economy contracted by 0.2 percent year-on-year in the first quarter of 2020, a sharp reversal from the 5.7 percent growth over the same period a year ago. The growth contraction – the first in over two decades – was driven by a series of unexpected events, beginning with the Taal volcano eruption in early January which caused severe disruptions in tourism, agriculture, construction, and manufacturing activities, the initial outbreak of COVID-19 in China and in the region which impacted the Philippine’s tourism and trade; and the deepening of the outbreak into a global pandemic and local community transmission which led to the implementation of stringent containment measures globally and in the Philippines. These events have sharply reduced economic activity and induced losses of jobs and income. The cumulative impact of these events on the economy has been broad-based, steep, and deep, halting investment activity, and leading to the lowest consumption
growth in three decades. In response, the Philippine government implemented a set of fiscal and monetary measures to contain the health, economic, and social impact of COVID-19.