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Fixed asset investments lowest since 1985

Investment in fixed assets in the country fell to its lowest level in more than three-decades due to the sluggish economy brought about by the coronavirus pandemic, the Philippine Statistics Authority (PSA) reported.



Based on the data released by the PSA yesterday, the country’s gross capital formation (GCF) declined by 53.5 percent in April to June this year, its largest contraction since the first-quarter of 1985.



The second-quarter GCF, which refers to investments in tangible properties, such as equipment, tools, transportation assets, and electricity, is also worse than the 0.8 percent drop registered in the same period last year.


Before the pandemic, the GCF had grew on the average by 7.8 percent in the last two-decades and accounted for 14.5 percent of the economy or gross domestic product (GDP).


All GCF components declined in second quarter except for breeding stocks and orchard development which increased by 2.2 percent, PSA said. 



Changes in inventories, meanwhile, recorded its highest withdrawals amounting to P204.9 billion.

Valuables, the newest expenditure item highlighted in the expenditure side, also declined by 56.9 percent in second quarter, deeper than the 14.1 percent contraction seen in the previous year.



The latest GCF figure is aligned with the country’s second-quarter GDP performance that marked its deepest contraction on record at 16.5 percent during April to June period.


The country officially entered a technical recession this year after the GDP suffered two consecutive quarters of decline due to the significant drop in general economic activity that began in January.



President Duterte’s economic managers already adjusted the government’s GDP target for this year to minus 5.5 percent from an earlier estimate of 2.0 percent to 3.4 percent. At end-June, the economy already declined by 9.0 percent.



But the government has also expressed confidence that the country will be back on track  beginning next year as GDP is expected to grow by 6.5 percent to 7.5 percent.


Source: Manila Bulletin (https://mb.com.ph/2020/09/02/fixed-asset-investments-lowest-since-1985/?utm_source=rss&utm_medium=rss&utm_campaign=fixed-asset-investments-lowest-since-1985)

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