PH GDP seen contracting by 9.6% in 2020, growing by 7.7% in 2021

The Philippines’ gross domestic product (GDP) likely fell the fastest in Association of Southeast Asian Nations (Asean) last year but its growth would be the strongest in the region this year as the economy emerges from pandemic-induced movement restrictions, UK-based Oxford Economics said.

In a report on Wednesday, Oxford Economics lead Asia economist Sian Fenner and economist Sung Eun Jung projected that the Philippines’ GDP contracted by 9.6 percent in 2020 but would grow 7.7 percent in 2021, a similar growth rate they estimated for Vietnam.

The government is scheduled to report on the 2020 GDP performance today, Jan. 28. The Philippine Statistics Authority (PSA) on Wednesday said GDP contraction during the third quarter of 2020 was slightly slower at 11.4 percent compared to the worse-than-expected 11.5-percent drop announced last November.

“We expect a solid rebound in growth this year across the region. Vietnam and the Philippines are set to outpace the rest, although in the case of the Philippines, this reflects low base effects after last year’s sharp contraction,” said Oxford Economics, whose forecast was more optimistic than the government’s target of a 6.5- to 7.5-percent expansion in 2021.

Oxford Economics also attributed its rosy outlook for the Philippines to the boost coming from the quantitative easing-like support being extended by the Bangko Sentral ng Pilipinas, as well as the projected 10-percent increase in government spending on public goods and services this year to make up for last year’s delays, especially on infrastructure disbursements.

But while most of Asean were on their way to normalization in economic activities, Oxford Economics said the Philippines and Thailand had “lagged” behind their neighbors.

“Travel restrictions have weighed on the recovery in Thailand, despite its earlier success in controlling infections, while prolonged lockdowns have weighed on activity in the Philippines,” it said.

“After lagging behind peers in the region, we expect the recovery in manufacturing and goods exports in Thailand and the Philippines to pick up pace over 2021 … In the Philippines, we expect an easing of restrictions after last year’s prolonged lockdown to underpin a catch-up in the pace of normalization of activity,” it added.

Oxford Economics said the Philippines would likely further reopen its economy from prolonged quarantine restrictions “despite the expectation that only 35 percent of its population will be vaccinated by the end of the year, as it experienced one of the strictest and more prolonged lockdowns in the region.”

In case the deployment of COVID-19 vaccines would be faster than expected, Oxford Economics said “the gains will be felt most by those countries that are still struggling with the pandemic, notably Indonesia and the Philippines.” —BEN O. DE VERA