Singapore-based United Overseas Bank Ltd. (UOB) has projected a bigger first-quarter economic contraction of 2.5 percent year-on-year for the Philippines and sees downside risks to this year’s growth outlook amid a prolonged quarantine and the government’s slow vaccination drive.
UOB’s first-quarter gross domestic product (GDP) forecast meant a fifth-straight quarter of recession and a faster drop in economic output compared to the 0.7 percent posted a year ago.
In its latest quarterly global outlook report, UOB still kept its full-year GDP growth forecast of 7 percent for the Philippines “barring any unexpected surprises due to the recent threat of mutated variants.” This is still within the government’s conservative target of 6.5 to 7.5 percent this year.
But UOB said mobility limits, labor market conditions and slow remittance inflows would continue to restrain the economy’s attempt for a rebound.
“Higher unemployment and poverty rate will weigh on household consumption and private investment in the first quarter before improving from the second quarter onwards,” UOB said.
The monthly unemployment rates at the start of the year were the highest in 16 years, with 4.2 million Filipinos rendered jobless in February.
The National Capital Region and nearby provinces, reverted back to the most stringent lockdown in March, which the National Economic and Development Authority believed would leave about 252,000 Filipinos unemployed on top of 102,000 who could become poor. INQ