Neda chief optimistic on Q3 GDP performance

The country’s chief economist expects a bigger third-quarter gross domestic product (GDP) than the second-quarter output amid supposedly improved management of health and economic risks despite recent Delta strain-induced lockdowns.

In a text message on Thursday, Socioeconomic Planning Secretary Karl Kendrick Chua said it was possible that the goods and services produced in the country from July to September grew compared to second-quarter GDP. The government’s third-quarter GDP report will be out on Nov. 9.

To recall, despite the 11.8-percent year-on-year GDP growth in the second quarter due to low-base effects, it was 1.3-percent smaller than the first quarter output, which ended the three preceding quarter-on-quarter gains which the economic team had touted as an indication of recovery. ING Philippines senior economist Nicholas Mapa told the Inquirer that he estimated the second-quarter GDP to be 0.7-percent larger than the first-quarter output, even as he described such growth rate to be “sluggish.”

Demand under pressure

“Domestic demand remained under pressure for much of the third quarter given the Delta variant-driven surge in new COVID-19 cases and tight restrictions, though some measures have started to ease since early August. We believe sequential momentum will pick up in the fourth quarter into 2022, but the low vaccination rate makes the country vulnerable to setbacks,” Oxford Economics assistant economist Makoto Tsuchiya said in an e-mail, referring to Metro Manila’s revert to the strictest enhanced community quarantine in August.

In a Sept. 29 report, London-based think tank Capital Economics said the Philippine economy was “likely to have seen a lackluster rebound in the third quarter.”

First-half GDP growth averaged 3.9 percent, such that second-quarter economic expansion needed to be faster to achieve the downgraded 4-5 percent target for 2021.

Chua, who heads the state planning agency National Economic and Development Authority (Neda), told a Palace press briefing that there had been a “big progress” in balancing the health and economic risks from the prolonged pandemic.

Growth in spending

Chua pointed to manufacturing, external trade and infrastructure spending growth during the third quarter, as well as improvement in mobility which he said reflected more Filipinos returning to their jobs.

The Neda chief said that public transportation use dropped by up to 80 percent last year, but the decline narrowed to about 25 percent at present, reflecting the same share of employees who were traveling to their workplaces.

At present, heightened COVID-19 restrictions covered 69 percent of the economy, but Chua said the declining number of daily infections on top of the implementation of granular lockdowns—which he claimed was already effective in containing virus spread—would eventually allow for further easing of restrictions on more economic activities.

Chua said lockdowns would not solve the health and socioeconomic problems inflicted by the pandemic. He said the goal to revert to the prepandemic yearly growth rates of 6-7 percent would depend on the actions to be undertaken to fight COVID-19 moving forward.