Return to pre-COVID growth seen by Q1 ’22
The tack to safely reopen the economy through localized lockdowns instead of blanket restrictions in the past would allow the Philippine economy to not only grow within-target in 2021 but also recover ground lost due the pandemic as early as the first quarter of 2022, President Duterte’s economic team said on Friday.
Speaking before foreign business chambers, Socioeconomic Planning Secretary Karl Kendrick Chua was more optimistic than most private-sector economists’ projections that gross domestic product (GDP) or economic output would match prepandemic levels only toward the end of next year, making the Philippines a laggard in the region alongside Thailand.
“Prospects for 2021 remain encouraging and will allow us to recover to prepandemic levels around the start of 2022. This will prevent long-term scarring and productivity losses,” said Chua, who heads the state planning agency National Economic and Development Authority (Neda).
Chua said the jump in movement of people and goods when the government adopted alert levels and granular lockdowns to contain outbreaks during the past couple of months, if sustained, would augur well to economic growth up to next year.
“Key sectors are beginning to recover to their prepandemic level,” he said.
For instance, airlines’ capacity climbed to 40 percent of prepandemic capacity this month from 16 percent in September this year and only 5 percent in September last year, Chua said, citing Neda estimates.
Visits to shopping malls also jumped to 63 percent of prepandemic levels in November as most of the country moved to the less restrictive alert level 2, from 35 percent in October and 24 percent in September 2020, Chua added.
“With children allowed to go out, major malls are reporting significant increases, at 50 percent of prepandemic, normal capacity during weekdays and a high of 81 percent during weekends, and this is largely driven by families and children that are already going out,” the Neda chief said.
Consumption in major fast-food chains likewise improved to 78 percent of prepandemic sales this month from 69 percent in October and 35 percent in September last year, he added. “All of these show that with further easing of the restrictions and opening of the economy, we are likely to recover to our prepandemic GDP level by early 2022.”
Last year, when the Philippine economy slipped to its worst post-war annual recession as economic output shrank by a record 9.6 percent, nominal GDP fell to P17.9 trillion from P19.5 trillion in 2019.
Chua and Finance Secretary Carlos Dominguez III both expressed confidence that, with mass vaccination in full swing and its boost to private consumption, “there is now a greater likelihood that our full-year growth will hit the higher end of our 4-5 percent GDP target for this year,” Dominguez said.
GDP grew by an average of 4.9 percent during the first nine months, lifted by the better-than-expected 7.1-percent third quarter expansion even as the recession spilled over up to the first quarter of 2021.
“With brightening prospects for the economy, we expect to do even better in the fourth quarter as we continue to relax mobility restrictions,” Dominguez said in his speech.
“With current trends, we expect to achieve the full reopening of the economy by the onset of the New Year. We are ready for a strong recovery,” Dominguez added.
Chua said the country could move to the least restrictive alert level 1 by January but “this will require the cooperation of everyone in adhering to the health standards, especially during the holiday season” plus expanding the mass vaccination program’s coverage to kids as young as age five “at the appropriate time.”
Further relaxation would make the more ambitious 7-9 percent GDP growth goal for 2022 achievable, Chua said.
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