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Philippines seen posting decent Q1 growth
MANILA, Philippines — The Philippine economy likely survived the Omicron threat in January with a decent first quarter growth and further recovery on the way, an international think tank said.
In its weekly brief, Capital Economics said first quarter gross domestic product (GDP) for the Philippines likely grew by 6.7 percent year-on-year and inched up 1.5 percent on a quarterly basis.
Market consensus is for a six percent expansion for the first quarter.
The economy is coming from a low base of a 3.9 percent contraction in the same period last year. The government will release the first quarter GDP data on Thursday, May 12.
“GDP is likely to have grown at a decent pace in the first quarter despite a huge Omicron outbreak in the middle of the quarter,” senior Asia economist Gareth Leather said.
The Philippines dealt with the Omicron variant in January that led to record-high daily COVID cases. This prompted the return of mobility curbs albeit in a moderate manner.
Metro Manila, where the bulk of economic activity is situated, was only reverted to Alert Level 3.
By mid-February, COVID cases started to fall sharply, allowing the government to start easing restrictions again.
Leather said the government reacted to the new outbreak with few new restrictions. Mobility data also showed that the movement of people dipped, but only for a relatively brief period and recovered sharply thereafter.
“The outbreak also had little impact on the labor market. The unemployment rate edged down in the first quarter of the year and is now close to its pre-pandemic level,” Leather said.
He emphasized that the economy should continue to recover, with day-to-day disruption from the virus largely in the rear-view mirror.
He noted that the opening of borders to tourists should provide an added tailwind, although any recovery of tourism is likely to be gradual.
“While growth will remain elevated, the damage from the pandemic will remain huge, with GDP only likely to have regained its pre-crisis level this quarter,” Leather said.
On the other hand, Capital Economics maintained that interest rates in the country would rise soon, but the tightening cycle is likely to be gradual.
It is looking at two 25-basis point rate hikes this year, less than what is being priced in by financial markets and lower than the consensus estimate.
Source: https://www.philstar.com/business/2022/05/09/2179644/philippines-seen-posting-decent-q1-growth