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ING Bank ups 2021 Philippines growth estimate
ING Bank’s local unit raised its Philippine gross domestic product (GDP) growth estimate for 2021, but warned that economic expansion this year is likely to fall short of the government’s target.
According to Nicholas Antonio Mapa, ING Bank Manila senior economist, the Philippine economy likely grew by 5.4 percent last year, aided by a 6.7-percent increase in the GDP in the fourth quarter.
His growth estimate for 2021, however, fell short of the revised 5- to 5.5-percent target set by the interagency Development Budget Coordination Committee.
“After two Covid-19 surges, Philippine GDP will likely settle at 5.4 percent for 2021, at the upper-end of the twice downgraded growth target, but also more than a full percentage point lower than the original growth aspiration,” Mapa added.
He went on to say that by the fourth quarter of 2021, case counts were falling, resulting in loosened restrictions and a collective sense of festive happiness, promoting revenge spending at every turn.
“And although the storm damage from Super Typhoon ‘Odette’ will likely take some shine off economic recovery, the sheer pickup in activity in the capital region will likely be enough to power 4Q (fourth quarter) 2021 GDP to 6.7 percent,” Mapa added.
His fourth-quarter and full-year 2022 GDP estimates are higher from his previous expectations of 5.3 percent and 5.1 percent, respectively.
Despite this, the economist believes the government would have to reconsider its 7- to 9-percent growth objective for this year, as the rising number of Covid-19 cases is likely to stymie the economy’s recovery.
As Covid cases began to rise significantly to close out 2021, he claimed, revenge spending and holiday cheer came to an abrupt halt and 2022 welcomed the country with cases reaching new highs as infections spread rapidly in places with high mobility throughout the Christmas season.
“And although metrics do suggest a lower hospitalization rate so far,” Mapa noted, “one can not dismiss the fact that the recovery momentum has been disrupted by the current spike in cases.”
As Filipinos prepare to convalesce at home, he added, mobility metrics associated with brisk economic activity have fallen sharply as they are either isolating sick at home or too afraid of contracting the virus, stressing that household spending will likely shift sharply from revenge spending in the mall to vitamins, herbal tea and analgesics.
Thousands of workers will be out of commission for a few days if they contract the virus at work or through close contacts, according to Mapa, resulting in poor or no productivity while they recuperate.
While these disruptions may be overcome, he warned that the country should prepare for a possible pullback in expectations and sentiment from both businesses and consumers — two metrics that had shown some promise in the fourth quarter of 2021 — and can be expected to have a reversal in the first quarter of 2022.
“All these disruptions, coupled with the fact that we will no longer benefit from a favorable base, suggest that the 7- to 9-percent growth aspiration may need to be revisited after all this is said and done,” the economist concluded.
Source: https://www.manilatimes.net/2022/01/19/business/top-business/ing-bank-ups-2021-ph-growth-estimate/1829860