Amid prolonged quarantine for over a year now and the reimposition of tighter restrictions before the first quarter ended in areas accounting for half of the economy, the Philippines’ gross domestic product (GDP) likely contracted faster year-on-year in the first quarter.
Investment banking giant Goldman Sachs projected the country’s first-quarter GDP to have shrunk by 1.1 percent year-on-year, faster than the 0.7 percent contraction a year ago.
For the entire 2021, Goldman Sachs sees the economy growing by 7.7 percent, slower than the 8.4-percent expansion it projected in January.
Late last year, Goldman Sachs was more bullish with a 9.5-percent growth forecast for 2021.
Given a low base from 2020 when GDP fell 9.5 percent, Goldman Sachs’ updated 2021 growth forecast stayed above the government’s 6.5-7.5 percent target.
Yuanliu Hu, Asia economist at the Washington-based Institute of International Finance (IIF), projected a bigger 2-percent year-on-year contraction in first-quarter GDP as it could manage only a 1-percent quarter-on-quarter growth compared to the fourth quarter of 2020.
The slowing quarter-on-quarter growth—from 8 percent in the third quarter and 5.6 percent in the fourth quarter of 2020—reflected the sluggish reopening of the economy, especially as COVID-19 cases surged in March.
“Because of the new round of lockdown and slow vaccination drive, the country’s recovery path will be lagging compared with other countries in the region,” Hu said, referring to the reimposed stringent enhanced community quarantine in Metro Manila and the provinces of Bulacan, Cavite, Laguna and Rizal during Holy Week.
“The Philippines will have 7.2-percent growth this year and will only be back to prepandemic [GDP] level by the second half of the next year,” he added. INQ