PH GDP growth slowed to 4.6% in Q3, says survey

Economists surveyed by the think tank Japan Center for Economic Research (JCER) expect the Philippines’ growth to have slowed to 4.6 percent year-on-year in the third quarter while keeping their full-year expectations intact despite poor pandemic response.

The third-quarter gross domestic product (GDP) consensus growth forecast for the Philippines based on JCER’s poll in September declined from the average projection of a 6.6-percent expansion in its preceding June survey.

For the Philippines, JCER polled Bank of the Philippine Islands’ Emilio Neri Jr., Barclays’ Angela Hsieh, BDO Unibank’s Jonathan Ravelas, ING’s Nicholas Mapa, Metrobank’s Pauline Revillas, Nomura’s Euben Paracuelles, Philippine Equity Partners’ Jojo Gonzales, and UnionBank’s Carlo Asuncion.

These economists also downgraded their fourth-quarter growth forecast to 5.2 percent from 5.5 percent previously.

Tempered expectations

Their full-year GDP projection stayed at 4.3-percent growth, now within the government’s less optimistic 4 to 5 percent target range. President Duterte’s economic managers earlier targeted 6.5 to 7.5 percent GDP growth for 2021, but they later on tempered their expectations, especially after COVID-19’s more infectious Delta strain forced a two-week return to the strictest lockdown level in Metro Manila in August.

But for 2022, economists upgraded their GDP growth forecasts to an average of 6.6 percent from 6.2 percent previously, although below the government’s 7 to 9 percent goal.

JCER said that while the Philippines kept its full-year 2021 growth outlook similar to expectations a quarter ago, “the country has struggled to contain COVID-19 and to roll out the vaccination.”

“The Philippines is now facing its fourth and severest wave of infection. While it seemed to have been successful in containing COVID-19 in the second quarter, the virus once again started to spread in the third quarter. Per capita infection in the middle of September reached 190 per million, almost the same figure as that of Thailand. The vaccination rate is just above 20 percent, half of Thailand’s and the lowest among the countries surveyed,” JCER said. Besides the Philippines, the JCER report also covered China, India, Indonesia, Malaysia, Singapore and Thailand.

In the next 12 months, economists anticipate COVID-19 shock as the top risk for the Philippines, similar to the two prior quarters.

They also see market-related risks from the US’ monetary policy as well as high inflation among the biggest threats to the Philippine economy moving forward.

Specifically, economists believed that the looming tapering of the US Federal Reserve would further weaken the peso.

Their average inflation forecast of 4.1 percent for 2021 was above the Bangko Sentral ng Pilipinas’ (BSP) 2-4 percent targeted rate of increase in prices of basic commodities being deemed as manageable. Headline inflation would return within target to 3.2 percent in 2022, economists’ estimates showed.

Following the 15-year high unemployment rate of 10.4 percent in 2020 amid the Philippines’ worst post-war recession, joblessness was expected to gradually decline to 7.6 percent this year and 6.6 percent next year.

Ravelas was quoted by JCER as saying that bigger exports and remittances would boost economic recovery and move GDP closer to pre-pandemic levels.

But Gonzales was wary about rising freight costs — said to be now twice higher than pre-pandemic rates — which may hike import inflation and make export growth lackluster.