Trade, construction activities jumped in Q2

Domestic trade and construction activities jumped year-on-year in the second quarter of 2021, reflecting green shoots of economic recovery when quarantine restrictions were gradually eased before the more infectious Delta strain of COVID-19 forced a return to the strictest lockdowns during the current quarter.

The latest preliminary Philippine Statistics Authority (PSA) data showed that the quantity of goods traded across the country from April to June climbed 30.1 percent to 3.74 million metric tons from 2.88 million MT a year ago, which in turn had fallen 64.5-percent below the prepandemic volume.

While the volume of products traded locally declined from the first quarter’s 5.25 million MT, year-on-year growth was faster during the second quarter due to low base effects as 75 percent of the economy stopped at the height of the most stringent lockdown imposed from mid-March to May last year.

In terms of value of locally traded goods, the P141.77 billion worth in the second quarter was 24.5-percent bigger than the P113.84 billion last year, which was 46-percent lower compared to prepandemic levels.

The value of products traded throughout the archipelago from April to June also exceeded the P131.39 billion recorded in the first quarter.

Building permits

Separate construction statistics of the PSA, which was sourced from approved building permits nationwide, showed the total number of construction projects soared 114.1 percent to 38,389 during the second quarter from 17,932 a year ago, and was higher than the first quarter’s 36,621.

These projects, which started construction in the second quarter, would cover a total of 7.14 million square meters (sq m) of floor area, up 148.2 percent from 2.88 million sq m a year ago.

The value of second-quarter construction projects also jumped 194.3 percent to P84.36 billion from the P28.66 billion worth last year.

Socioeconomic Planning Secretary Karl Kendrick Chua said in a webinar on Tuesday that the Philippine economy “[began] to recover in the second quarter of 2021, with an 11.8-percent economic growth rate as we better manage the risks and balance the need of the people from both COVID-19 and non-COVID-19 concerns.”

Prospects

“Prospects remain encouraging as we project to grow by 4 to 5 percent this year and recover to prepandemic growth rates by the end of 2022 or early 2023. This recovery will be supported by our accelerated vaccination program, the safe reopening of the economy where we target lockdowns at the sources of highest risks only, and the full implementation of our recovery package,” said Chua, who heads the state planning agency National Economic and Development Authority.

In a note to clients, ING Philippines senior economist Nicholas Mapa said the growth in building permits as reported by the PSA “was driven in large part by base effects as economic activity picked up relative to the extreme lockdowns experienced in 2020.”

“This reflects pent-up permits as construction activity was finally allowed to resume in some parts and on a staggered and limited basis,” Mapa said.

Citing the Bangko Sentral ng Pilipinas’ residential real estate price index, Mapa noted that “housing prices outside NCR (National Capital Region) and for single detached units have picked up, which is reflected in the permits data.”

For Mapa, “this trend suggests that the Philippines is also experiencing the global phenomenon of migration from the urban centers to the areas outside the city with Filipinos in search of more space.”

“After being locked down in the city for more than a year, it’s no surprise that there is now a natural and healthy demand for property and homes outside the city. This, in turn, will aid in the development of areas outside NCR as the Philippines hopes to undergo some form of de-urbanization,” Mapa added.