Modest GDP growth in Q3 seen

Despite stricter quarantine amid a surge then in COVID-19 cases, gross domestic product (GDP) during the third quarter likely grew compared to the second quarter’s output, most economists watching the Philippines said, although year-on-year growth would have fallen below 7 percent.

All 19 third-quarter GDP growth forecasts collected by the Inquirer last week were below the 11.8-percent year-on-year jump in the second quarter, which benefited from base effects as 75 percent of the economy stopped during the most stringent lockdown imposed from mid-March to May of last year at the onset of the pandemic.

The government will report on the third-quarter economic performance on Tuesday.

Most of the economists polled by the Inquirer expect third-quarter GDP to be bigger by 0.2 to 3.4 percent than second-quarter output.

To recall, GDP during the April to June period declined 1.3 percent compared to the value of goods and services produced in the first quarter.

Economists were optimistic that the further reopening of more economic activities during the current fourth quarter would support faster recovery from last year’s pandemic-induced, worst post-war recession.

Security Bank’s Robert Dan Roces had the highest third-quarter GDP growth forecast of 10.4 percent year-on-year.

Mobility curbs

Rizal Commercial Banking Corp.’s Michael Ricafort forecasted 6.5 percent; Philippine National Bank’s Alvin Joseph Arogo, 5.8 percent; Bank of the Philippines Islands’ Emilio Neri Jr., 5.6 percent; Barclays’ Shreya Sodhani, 5 percent; and Maybank’s Suhaimi Bin Ilias, 5 percent.

Moody’s Analytics’ Sonia Zhu and UnionBank’s Ruben Carlo Asuncion shared the same projection of 4.6 percent; Sun Life Financial’s Patrick Ella projected 4.5 percent; while BDO Unibank’s Jonathan Ravelas, HSBC Global Research and Oxford Economics’ Makoto Tsuchiya pegged third-quarter growth at 4.3 percent.

Ravelas noted that there remained sporadic lockdowns with much restrictive mobility curbs during the July-to-September period. For instance, Metro Manila reverted to two weeks of the strictest enhanced community quarantine (ECQ) in August to contain the spread of the more infectious Delta strain of COVID-19.

The forecast of DBS’s Chua Han Teng was 4.2 percent; Capital Economics’ Alex Holmes, 4 percent; ING’s Nicholas Antonio Mapa, 3.8 percent; Goldman Sachs Economics Research, 3.6 percent; IHS Markit’s Rajiv Biswas and Patheon Macroeconomics’ Miguel Chanco, 3.5 percent; and the lowest 2.9 percent year-on-year growth projection of Nomura’s Euben Paracuelles, who also projected 0.2-percent quarter-on-quarter decline in GDP.

Ilias, who also expected a smaller output in the third quarter compared to the April-to-June period, pointed to the impact of Typhoon “Jolina” on the agriculture sector in September.

Moving forward, Neri said “there’s a big chance that fourth-quarter growth onwards will improve further as reopening is likely to be more sustainable.” The government already adopted “alert levels” to impose granular or localized quarantines instead of blanket restrictions amid declining infections.

“This means 4-percent full-year growth may still be within reach,” Neri said. The government targets 4 to 5 percent GDP growth in 2021.

But Neri still flagged “downside risks can come from bad weather, persistent inflation and vaccine hesitancy in the regions.”

Holmes agreed that “the prospects for growth this quarter are much better.” INQ