MANILA – Power consumption in the country in the near-term will decline as the economy struggles with the coronavirus disease 2019 (Covid-19) pandemic, a Fitch Solutions outlook report said.
“We have turned more bearish on our near-term outlook for Philippines’ power and renewable sector, due to ongoing impacts from the Covid-19 pandemic. We now expect power consumption to contract by 5.9 percent,” Fitch Solutions said in a report released Friday.
It added that the country’s long and strict lockdown measures have led to a substantial slowdown in economic activity.
For this year, the group’s Country Risk team expected the Philippines’ gross domestic product to contract by 9.1 percent.
“We expect the recession to weigh heavily on power demand and generation extension, and have further revised our forecasts for 2020 sharply this quarter,” the report noted.
It also mentioned that there will be continued headwinds to power capacity growth over the near to medium term such as channeling away funds from infrastructure projects towards other immediate concerns like supporting the labor market and households through handouts and wage subsidies.
Likewise, failure to contain the Covid-19 will likely impact the country’s inability to attract foreign direct investments, it added.
However, Fitch Solutions remains optimistic about the country’s power demand over the longer term that will need stronger capacity growth.
“We believe that President Duterte will likely pivot back to his infrastructure strategy and ‘Build Build Build’ campaign after the situation improves, which will provide the necessary support for the power sector,” Fitch Solutions said.