Philippines: 2021 GDP growth seen at 6.3 percent

The Philippine economy likely grew by more than 6 percent in the fourth quarter of 2021, bringing the year-to-date growth to 5.2 percent as eased quarantine restrictions pushed up household consumption, analysts polled by The Manila Times said.

Projections for the period ranged from 5.3 to 7.0 percent with a 6.3-percent average, slower than the 7.1-percent expansion in the third quarter but a reversal from the 8.3-percent contraction in the fourth quarter of 2020.

Analysts said full-year GDP contraction will likely settle at 5.2 percent, the upper end of the government’s 5- to 5.5-percent target. It will also be a turnaround from the 9.6-percent contraction in 2020.

Official fourth quarter and whole year 2020 Philippine economic growth data is set to be released by the Philippine Statistics Authority (PSA) on January 27.

Rizal Commercial Banking Corp. (RCBC) senior economist Michael Ricafort projected fourth quarter GDP growth expansion to hit 7.0 percent on the back of the eased quarantine restrictions that helped businesses operate at a higher capacity.

Most parts of the country was placed under Alert Level 2 during the fourth quarter of 2021 that Ricafort said also allowed “senior citizens and minors to finally go out of their homes after [being] restricted in their homes for more than 1.5 years.”

“Domestic travel restrictions also further eased such as not requiring negative PCR (polymerase chain reaction) tests upon the discretion of the local government units, thereby spurring local travel and tourism,” said Ricafort.

Ricafort, however, said that offsetting risk factors during the quarter include the Covid-19 Omicron variant concerns and Typhoon “Odette” that caused damage in the Visayas and Mindanao.

ING Bank Manila senior economist Nicholas Mapa, for his part, forecast economic growth to hit 6.7 percent.

“Strong household consumption rebound as consumer and business sentiment improved with Covid infections down. This number would have been higher but storm damage from the super typhoon likely sapped some growth momentum. This should bring full-year GDP to 5.4 percent, at the upper end of the growth target but much lower than the original 6.5- to 7.5-percent growth target,” said Mapa.

Omicron cannot be overlooked

He, however, pointed out that economic recovery this year will be affected by the spike in Covid-19 cases.

“The outlook however for 2022 has been clouded by the recent spike in cases, possibly due to the Omicron variant. Business and consumer sentiment, which had made gains in 4Q (fourth quarter) 2021 likely pulled back somewhat in reaction to the recent reimposition of lockdowns,” said Mapa.

“The Philippines had a decent 2021 in terms of growth but it remains to be seen if this type of expansion can continue sans a favorable base and with the uncertainty that possible new Covid-19 variants could bring,” he added.

Standard Chartered Bank economist for Asia and the Philippines Jonathan Koh, meanwhile, forecast economic expansion to settle at 6.5 percent mainly due to mobility improvement.

“So, if let’s say we were to take a look at the average mobility for transportations as well as workplaces, which I think is a good gauge of economic activity, we do see that actually the average is the best since Q1 (first quarter) of 2020. So, the restrictions were actually being relaxed in the Philippines and are moving to a level two, I think mobility actually picked up and economic activity picked up,” he said.

An economist from Security Bank Corp. (SBC) projected the economy to grow by 5.8 percent.

“Domestic activity, notably retail footprint, was above pre-pandemic levels for most of 4Q21 (fourth quarter 2021) amid relaxed restrictions during peak holiday spending. As with 3Q21 (third quarter 2021), private consumption may have been the key driver of growth once again,” said SBC chief economist Robert Dan Roces.

Roces noted that while the storm damage from Odette may have shaved off some growth potential, the sheer pick up in activity notably in the capital region will likely be enough to lift growth.

He, however, also warned that the Omicron variant may exacerbate the seasonal slowdown in the first quarter of the year.

“We expect consumer confidence to diffuse once again in 1Q22 (first quarter 2022), but sentiment should turn around quickly and point to the upside once Omicron passes,” said Roces.

ANZ Research, meanwhile, gave the lowest projection of 5.3 percent

In a report, ANZ Research said mobility data during the quarter broadly improved on the back of rising vaccination uptake, which likely supported private consumption growth.

“Within the quarter, there was a mild slowdown in mobility towards the end December. Meanwhile, fiscal spending remained strong based on monthly data for October and November,” it said.

Source: https://www.manilatimes.net/2022/01/24/business/top-business/2021-gdp-growth-seen-at-63-percent/1830346