GDP to recover pre-pandemic levels by end 2022

The Philippine economy will likely get back into its previous growth path by the end of next year, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint report.

In the November issue of the Market Call, FMIC and UA&P said business optimism appeared renewed due to looser quarantine restrictions, ramped up infrastructure projects and election spending.

“Business and consumer sentiment should further boost economic activity to a full-year GDP growth slightly above the 4.0 percent to 5.0 percent revised government target,” the report said on Thursday, Nov. 24.

Average GDP growth from January to September stood at 4.9 percent, putting the country on course to meet its downgraded target this year.

In the third-quarter alone, the economy grew 7.1 percent, beating market consensus estimate of 4.9 percent.

The unexpectedly good third-quarter expansion has added more optimism to firms and consumers, FMIC and UA&P said.

Beyond the third-quarter GDP uptick, FMIC and UA&P noted that seasonally adjusted data also showed even stronger recovery, especially for the beleaguered consumer and services sectors.

“Looser COVID-related restrictions throughout the country, especially in Metro Manila+ should add fuel to the warming business and consumer sentiment,” FMIC and UA&P said.

“We expect a further ramping up of infrastructure spending starting fourth-quarter 2021 as election spending simmers with lineups firming up by end of the year,” it added.

For 2021, FMIC and UA&P are forecasting that the economy will likely post a full-year expansion at the lower end of the 5.0 percent to 6.0 percent range.

“We expect better numbers in fourth-quarter as the Metro Manila+ restrictions have eased beginning October and people appear to be more in the road in November as well as likely for the Christmas season,” FMIC and UA&P said.

The economy should grow at least 5.3 percent in the fourth quarter to meet the higher end of the government’s full-year growth goal.

“The economy will likely get back into its previous growth path by the end of 2022, even as inflation eases especially in first-quarter 2022,” FMIC and UA&P added.

The real GDP as of end-September 2021 was still 5.7 percent short of returning to its pre-pandemic levels, data from the Philippine Statistics Authority showed.

Socioeconomic Planning Secretary Karl Kendrick T. Chua, however, expects the sustained recovery in the coming months would bring country’s economy back to pre-pandemic levels of activity by the first quarter of 2022.

“In the remaining eight months of the Duterte administration, our top priority will be laying the foundation for a COVID-19 resilient society that can live with the virus. We will return to the path of rapid and more inclusive growth,” Chua said.