Despite Delta, PH GDP likely grew in Q3

Despite the recent revert to stricter lockdowns to contain the spread of the more infectious Delta strain of COVID-19, the Philippines’ third-quarter gross domestic product (GDP) likely increased compared to second-quarter output, think tanks said.

In a report on Friday, Capital Economics Asia economist Alex Holmes said that across most of emerging Asia, third-quarter GDP data would be “downbeat” due to the Delta outbreak in the region at that time.

The London-based Capital Economics nonetheless projected a “small bounce back” in the Philippines, or quarter-on-quarter GDP growth of less than 2 percent in the third quarter.

To recall, second-quarter GDP shrank by 1.3 percent compared to first-quarter output due to the enhanced community quarantine imposed in late March to early April.

The year-on-year growth during the second quarter jumped 11.8 percent compared to last year’s trough when 75 percent of the economy stopped at the height of the most stringent COVID-19 lockdown imposed in the Philippines at the onset of the pandemic.

Capital Economics projected fourth-quarter GDP to grow further, by over 4 percent compared to third-quarter output.

Across the region, “output should rebound strongly in the final quarter of the year,” Capital Economics said.

“Most economies have turned a corner in recent weeks. Following the biggest COVID-19 outbreak to date, cases in Southeast Asia have fallen dramatically. Governments are rolling back restrictions and our mobility trackers show the movement of people is bouncing back. After two quarters of being hammered by the virus, private consumption should rebound strongly this quarter,” it said.

“That said, the recovery is coming from a low base—GDP in most countries is still well below pre-crisis levels—and the region will enter 2022 with lots of spare capacity. This will help keep a lid on underlying price pressures and is a key reason why we think central banks in the region will be in little hurry to tighten policy,” it added.

Capital Economics had forecast the Philippine economy to grow 4.5 percent this year, in the mid-range of the government’s 4 to 5 percent target.

In an Oct. 20 report, the Washington-based Institute of International Finance (IIF) said that “mobility restrictions remain a drag on economic activity” in the Philippines, hence could slow exports and, in turn, narrow the current account surplus this year.

The IIF said that despite elevated headline inflation in the Philippines, the Bangko Sentral ng Pilipinas “will likely continue to see through what it perceives as a temporary and largely supply-side driven pickup.”

The IIF early this month slashed its 2021 growth forecast for the Philippines to 3 percent, or 4.2 percentage points below the estimate in April—the biggest cut in Asean-5, which included Indonesia, Malaysia, Thailand and Vietnam. INQ