Recession seen lingering through Q1 of 2021

Private economists watching the Philippines have projected the pandemic-induced recession spilling over to the first quarter of next year before a double-digit growth rebound in the second quarter.

According to the latest survey conducted by the think tank Japan Center for Economic Research (JCER), nine economists now expected the Philippines’ gross domestic product (GDP) to drop 9.6 percent in the fourth quarter, a bigger decline than the 4.2-percent projection in September.

The Philippines’ GDP shrank by an average of 10 percent during the first nine months amid a prolonged quarantine as COVID-19 cases remained high.

Economists see full-year GDP contraction hitting a record 9.8 percent in 2020, bigger than the government’s estimates of 8.5 to 9.5 percent and would be the Philippines’ worst economic turnout post-war.

Economists also see a 1.6-percent year-on-year contraction in GDP during the first quarter of 2021, reversing the previous forecast of reverting to 3.4-percent growth at the start of next year.

Other Asian countries like India, Singapore and Thailand were also expected to post GDP contraction in the first quarter.

But given base effects—the Philippines’ GDP slid the fastest at 16.9 percent year-on-year during the second quarter when 75 percent of the economy stopped at the height of the region’s strictest COVID-19 lockdown—the second quarter of 2021 is seen bouncing back with an 11.2-percent growth, faster than the earlier forecast of 9.6-percent expansion.

With projected GDP growth of 6.1 percent in the third quarter of 2021, full-year growth is estimated at 5.9 percent, below the government’s 6.5-7.5 percent target for next year.

The economists surveyed by JCER were Ateneo de Manila University’s Alvin Ang, Banco de Oro Unibank Inc.’s Jonathan Ravelas, Bank of the Philippine Islands’ Emilio Neri Jr., Metrobank’s Pauline Revillas, UnionBank of the Philippines’ Carlo Asuncion and University of Asia and the Pacific’s Victor Abola.

The outlook for the Philippines showed “weak recovery due to overextended lockdowns,” Abola was quoted by JCER as saying.

Also, “there are certain jobs that will be slower than others to return,” Asuncion noted.

For his part, Neri said that “with the economy slowly reopening, local demand will most likely improve although a full recovery is not expected in 2021.” —BEN O. DE VERA INQ