Slower but steady growth lifts hopes for GDP recovery to pre-pandemic levels

Published November 10, 2021, 12:03 AM

by Manila Bulletin

Coming on the heels of the strictest quarantine regime in August and September, the economy grew by 7.1 percent in the third quarter, slower than the revised second-quarter growth of 12 percent. This exceeded the 4.8 percent consensus market forecast and fanned hopes for a strong finish — possibly to pre-pandemic levels — for the Duterte administration with nine months left on its watch.

Economic Planning Secretary Karl Kendrick Chua pointed out that the country posted “among the highest third-quarter growths in the ASEAN and East Asian region.” He observed that this was achieved on account of government’s decision to allow businesses to resume operations while observing health protocols to fend off the upsurge brought on by the highly infectious coronavirus Delta variant.

The country’s nine-month GDP growth now stands at 4.9 percent, settling at the upper end of the government’s revised target of 4.0 percent to 5.0 percent for the year. The economy should grow by at least 5.3 percent in the fourth quarter to meet the higher end of the government’s full-year growth goal.

Boosting the upward trajectory was growth in the services and industry sectors at 8.2 percent and 7.9 percent, respectively. In contrast, agriculture declined by 1.7 percent as livestock output was still hobbled by the African swine flu pandemic. Crops that account for 54 percent of total agriculture and fisheries output were pulled down by the 18.6 percent fall in corn production.

Household consumption which grew by 7.1 percent contributed 5.2 percentage points of overall GDP growth. The rising tide of consumer confidence is likely to be sustained by more active spending during the Christmas season — enabled by the easing of mobility and capacity restrictions that could bring back foot traffic in malls, shops, food and recreational facilities to pre-pandemic levels.

Investments and government spending, the other major components of GDP, also registered significant increases. Total investments grew by 22 percent as public and private construction grew by 55.3 percent and 12.2 percent, respectively. Government expenditures grew by 13.6 percent reversing the previous quarter’s contraction. Finally, both imports and exports also grew by 13.2 percent and 9 percent, respectively — thereby signaling the increasing tempo of world trade despite global logistics issues.

Concerted action by all key stakeholders is essential. The private sector has not been remiss in pitching its share.  Employers continue to work on raising employment levels anew as jobs are key to sustained economic recovery. The latest unemployment report showed that the agriculture and forestry and manufacturing sectors combined accounted for more than 1.1 million jobs lost during the third quarter.

Moreover, social safety net protection needs to be enhanced further — or we could again witness the re-emergence of community pantries to address the basic needs of households whose family heads had been displaced from jobs. The high vaccination rates in Metro Manila appear to have greatly slowed COVID infection.  If this could be ramped up, too, in Visayas and Mindanao, the elusive goal of attaining community protection could enable a smoother ride back to pre-pandemic economic growth.