GDP growth moderated in Q4 — poll
THE PHILIPPINES’ gross domestic product (GDP) growth is expected to have moderated in the fourth quarter of 2021, even as the more relaxed quarantine restrictions spurred economic activity.
A BusinessWorld poll of 18 economists yielded a GDP growth median estimate of 6.5% for the fourth quarter, and 5.3% for full-year 2021.
The fourth-quarter growth forecast is a tad slower than the 7.1% uptick in the third quarter and the 12% growth in the second quarter. However, it is a turnaround from the 8.3% decline seen during the October to December period in 2020.
Should the full-year estimate be realized, this would be a turnaround from the record 9.6% contraction in 2020, but lower than the 6.1% growth in 2019.
It would also fall within the government’s forecast range of 5-5.5%.
The poll’s 5.3% growth median estimate for 2021 compares with the International Monetary Fund’s 3.2% forecast, Asian Development Bank’s 5.1%, and matches the World Bank’s 5.3%.
Fitch Solutions and Moody’s Investors Service gave growth estimates of 4.5% and 4.8%, respectively, while ASEAN+3 Macroeconomic Research Office penciled in a 4.3% growth.
The Philippine Statistics Authority will release the GDP and December trade data on Jan. 27, a day after the agency is set to report agriculture performance on Jan. 26.
Economists attributed the GDP growth in the last three months of 2021 to the further easing of movement restrictions amid the decline in new coronavirus disease 2019 (COVID-19) cases, allowing more businesses to increase operational capacity.
Most parts of the Philippines were under the more relaxed Alert Level 2 from Nov. 5, 2021 to Jan. 2, 2022.
“Gradual easing in restrictions in Q4 likely resulted in more economic activities domestically, buoying business and consumer sentiment,” said Makoto Tsuchiya, an economist from Oxford Economics, in an e-mail. “Indeed, manufacturing PMI (purchasing managers’ index) continuously breached 50 throughout Q4, reflecting greater domestic demand.”
Manufacturing PMI jumped to a nine-month high of 51.8 in December from 51.7 in November and 51 in October as new orders increased.
A reading above 50 indicates improving conditions in the manufacturing sector from the month before.
“Consumer spending was boosted by the sharp decline in COVID-19 daily new cases as well as seasonal Christmas sales, helping to underpin GDP growth in Q4 2021,” IHS Markit Asia and the Pacific Chief Economist Rajiv Biswas said in an e-mail.
“Positive growth in personal remittance inflows from workers abroad have also helped to support consumption spending in 2021,” he added.
Personal remittances increased by 4.8% annually to $2.77 billion in November, preliminary data from the Bangko Sentral ng Pilipinas showed. Year to date, it reached $31.59 billion, higher by 5.3% year on year.
Cash remittances coursed through banks rose by 5.1% year on year in November to $2.50 billion. This brought the remittances during the 11-month period to $28.43 billion, up by 5.2%.
Emilio S. Neri, Jr., lead economist of Bank of the Philippine Islands (BPI), said Typhoon Odette may have hampered demand and business activities in the Visayas and Mindanao, “but our estimates show this was not enough to offset the meaningful rebound during the quarter.”
Typhoon Odette (international name: Rai) ravaged many areas in the Visayas and Mindanao in mid-December. It left damage to infrastructure and agriculture worth P17.19 billion and P13.3 billion, respectively.
Economists are hoping to see the Philippine economy rebound this year but the outlook is clouded by the emergence of new COVID-19 variants.
“As for 2022, the Omicron wave has by now probably put the brakes on the recovery again,” Alex Holmes, Asia economist at Capital Economics, said in an e-mail. “On the plus side, restrictions being brought in are much less stringent than previously and we don’t expect a significant further tightening.”
“Overall, the recovery is more likely to stall, than slip into reverse, and should get back on track in Q2. Nonetheless, the more drawn out the recovery the worse the long-term scaring from the pandemic will be,” he added.
BPI’s Mr. Neri penciled in a growth estimate of 7.3% for 2022, “assuming that COVID-19 cases will drop sharply by March 2022, herd immunity will be achieved by the second quarter of 2022 and schools will gradually return to face-to-face interaction.”
“Downside risks to this will, of course, be the possibility of more severe COVID variants, poor conduct of the elections, an energy crisis, surge in global inflation, faster-than-expected US central bank rate hikes,” he said.
The government is targeting a 7-9% GDP growth for 2022. — Mariedel Irish U. Catilogo
