ECQ pulled back PH growth in Q3, says think tank

Barcelona-based FocusEconomics expects the Philippines’ third-quarter growth to have slowed amid a surge in COVID-19 cases at that time, while reopening more economic activities alongside the recent decline in infections augured well for faster fourth-quarter expansion.

“Following the second quarter’s rebound in growth, economic prospects seemed to worsen in the third quarter. A wave of COVID-19 cases that began in July forced a gradual tightening of restrictions that culminated in a two-week lockdown of the capital (Metro Manila) in August. The manufacturing PMI (purchasing managers’ index) averaged lower in the third quarter compared to the second quarter, on the back of supply chain disruptions and faltering output,” FocusEconomics said in an Oct. 19 report.

Also “growth in both exports and imports receded in July to August, indicating deteriorating demand dynamics, while remittance growth hit a six-month low in July, likely inhibiting consumer spending, although remittance growth increased again in August,” it added.

FocusEconomics’ latest report on the Philippines did not indicate a gross domestic product (GDP) growth forecast for 2021, even as the think tank last month cut its estimate to 4.6 percent, within the government’s 4-5 percent target.

Moving forward, FocusEconomics said that “looser restrictions towards the end of the [third] quarter saw the PMI return to expansionary territory in September, boding well for activity in the fourth quarter.”

Timely passage of the proposed P5.02-trillion 2022 national budget, which was already approved by the Lower House and currently pending in the Senate, would “set out a notable ramp up in spending,” FocusEconomics said.

FocusEconomics’ panel of economists expect GDP growth of 6.8 percent both next year and in 2023. While the 2022 projection was below the government’s 7-9 percent growth goal, the 2023 estimate was within the 6-7 percent target set by the Development Budget Coordination Committee.

“GDP growth should speed up significantly in 2022, boosted by higher consumer spending and an improving external sector as the global vaccination effort picks up,” FocusEconomics said.

“However, a still-subdued vaccination rate at home and next year’s election pose key risks, with the current president to stand down in 2022,” it said.