Philippines: Bank forecasts 2021 growth at 5.1 percent

THE Philippine economy likely increased by 5.8 percent in the fourth quarter of 2021, bringing full-year growth to 5.1 percent, Security Bank Corp.‘s chief economist said.

Robert Dan Roces‘ full-year 2021 growth forecast is a reversal of the 9.6 percent contraction in 2020, but still falls short of the government’s 5- to 5.5-percent target.

Domestic activity, particularly retail footprint, was above pre-pandemic levels for the majority of the fourth quarter of 2021 despite loosened restrictions during peak holiday shopping, he explained.

Roces added that private consumption may have been the main engine of growth in the fourth quarter, as it was in the third.

“Although the storm damage from Super Typhoon ‘Odette‘ may have shaved off some growth potential, the sheer pickup in activity, notably in the capital region, will likely be enough to lift growth,” he further remarked.

Meanwhile, the economist underscored the Covid-19 Omicron variant may not have slowed activity in the latter part of the fourth quarter.

In 2022, he said the Omicron variant may intensify the seasonal slowdown that occurs every first quarter of the year, so economic activity will suffer in January-March but recover in the second quarter due to fewer cases and immunity numbers.

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

Security Bank has penciled in a 6.5-percent year-on-year growth for 2022, he said, because it anticipates growth to stabilize by the second half, boosted by the prospect of the country acquiring herd immunity in the late first half.

Roces noted, however, that international trade will face headwinds not only from the Omicron variant but also from China’s slowing economy, which could exacerbate supply chain difficulties and rising commodity prices.

Nonetheless, he anticipates local inflation to remain within the 2- to 4-percent target range due to positive base effects, giving the Bangko Sentral ng Pilipinas some breathing room in the near to medium term.

Source: https://www.manilatimes.net/2022/01/20/business/top-business/bank-forecasts-2021-growth-at-51-percent/1829956