PH Q1 GDP contraction adjusted to 3.9% from 4.2%

The Philippines’ economic contraction in the first quarter was adjusted to a smaller 3.9 percent from the 4.2 percent reported in May by the Philippine Statistics Authority (PSA), putting the country closer to achieving its full-year growth target.

The PSA explained that adjusted figures showed that the decline in professional and business services was a slower 4.4 percent year-on-year, from 6.5 percent in the earlier report.

The drop in construction was adjusted to 22.6 percent from 24.2 percent previously. The contraction in real estate and ownership of dwellings was also a smaller 11.7 percent compared to the preliminary estimate of 13.2 percent.

Also, the PSA said first-quarter gross national income—which combined GDP with Filipinos’ output abroad—had a slight revision from the 10.9-percent drop reported in May to 10.6 percent. This was because the net primary income from the rest of the world shrank by 75.6 percent, adjusted from the slightly bigger 75.8 percent previously.

This adjustment would narrow the quarterly growth needed to hit the 6 to 7 percent growth target. The government will report on the second-quarter GDP performance on Tuesday.

IHS Markit chief Asia-Pacific economist Rajiv Biswas on Monday said GDP likely grew 12 percent year-on-year during the April to June quarter, “due to the impact of low-base effects a year ago during the second quarter of 2020, when the Philippines went into a severe and protracted lockdown.”

“With economic activity having gradually improved during the latter part of 2020 and first half of 2021, the overall pace of growth in the second quarter of 2021 is expected to rebound,” Biswas said, en route to a 5.9-percent annual growth this year, below the government’s goal.

“The Philippines’ economy is expected to continue to show gradual expansion in the second half, growing at a rate of around 8 percent year-on-year in the last two quarters of 2021. However, a key downside risk to the near-term outlook for the remainder of 2021 is from the escalating COVID-19 Delta wave, which could again significantly disrupt economic activity,” Biswas said.