2022 PH growth forecast cut to 7.1%

Further economic reopening during last year’s Christmas holidays likely lifted growth in 2021, but the COVID-19 infection surge at the start of this year is seen tempering gross domestic product (GDP) expansion, investment banking giant Goldman Sachs’ updated forecasts showed.

In a Jan. 8 report, Goldman Sachs Economics Research noted that “the Omicron variant of COVID-19 has begun spreading in most Asia-Pacific economies.”

“Given the much higher infectivity of this strain, an ‘Omicron wave’ is likely across much of the region in coming weeks,” Goldman Sachs warned.

“While Omicron appears to cause less severe disease than earlier variants, much higher infection rates could still lead to a meaningful rise in hospitalizations in coming weeks. This in turn may prompt at least a modest increase in restrictions across the region, as we are starting to see in India, Hong Kong and the Philippines, for example,” Goldman Sachs said.

Surge in cases

As COVID-19 cases surged, Metro Manila, four surrounding provinces, and other areas, which accounted for about half of the economy had been placed under stricter alert level 3 restrictions until Jan. 15. The economic team on Friday said the move to one-notch higher alert level will cost P3 billion in output losses per week.

Goldman Sachs noted that as Omicron community transmission was likely already present in the Philippines given the current pick-up in infections, local executives in Metro Manila imposed lockdowns for those still unvaccinated against COVID-19.

In a separate Jan. 7 report, Goldman Sachs said “Indonesia and the Philippines are lagging in terms of regional vaccination progress” with only 61 percent and 53 percent, respectively, of their populations inoculated with at least one dose of the COVID-19 vaccine as of last week.

As such, Goldman Sachs cut its 2022 GDP growth projection for the Philippines to 7.1 percent from 7.3 percent previously. Its forecast remained within the government’s 7 to 9 percent growth target.

Next to Vietnam’s 9.5-percent and India’s 9-percent projected growth rates this year, the Philippines was expected by Goldman Sachs to exceed Malaysia’s 6.5 percent, Indonesia’s 5.1 percent, Singapore’s 5 percent, Thailand’s 3.4 percent, Taiwan’s 3.2 percent, South Korea’s 3.1 percent, and Hong Kong’s 2.6 percent.

Slower increase

Goldman Sachs forecasted GDP in the first quarter to grow 6.6 percent year-on-year, down from 6.9 percent previously.

Quarter-on-quarter, Goldman Sachs estimated first-quarter GDP to be 0.7-percent bigger than economic output during the fourth quarter of 2021, a slower increase compared to the previous expectation of 1.4-percent growth.

Goldman Sachs was nonetheless more optimistic of second-quarter growth, slightly raising its forecast to 9.5 percent year-on-year from 9.4 percent previously.

For Goldman Sachs, 2021 likely ended with 5.1-percent full-year GDP growth, a faster expansion than its earlier forecast of 4.9 percent.

It projected the fourth quarter of last year to have grown by 5.6 percent year-on-year, more optimistic than the previous 5.1-percent projection.

This came on the back of expectations that fourth-quarter 2021 output rose 1.7 percent compared to the third quarter’s, also an improvement from the prior 1.2-percent quarter-on-quarter growth forecast.

Goldman Sachs said it jacked up growth estimates for the fourth quarter of 2021 due to “stronger tracking data and/or mobility in Indonesia, Malaysia and Philippines.” INQ