GDP won’t hit 6% in next quarters -- ING

The country’s gross domestic product (GDP) is not likely to grow at the six-percent level yet in the next five quarters since the recovery is “choppy” and there is a lot more uncertainty because of the lockdown or mobility restrictions, said ING Bank senior economist Nicholas Mapa.

The size of the economy has declined significantly and Mapa said that “it will take a while for us to definitely go back to where we were (before COVID-19) and even if we do get there next year maybe even earlier than expected, it would still be a good two years (from 2019).”

“We have a lot of ground to cover and we made a good start in the third quarter,” he said in an online press chat on Friday, Nov. 26.

(Mark Balmores / File Photo / MANILA BULLETIN)

Mapa said a return to 2019 GDP level may happen in the second half of 2022. “It’s not quite third quarter but it’s definitely in the fourth quarter given how things are moving right now,” he said.

Mapa said that from 2013 to 2019 there was a straight line of growth averaging at 6.2 percent year-on-year. “We need to get back to that (level). That’s the end goal and hopefully we can go back to that sooner rather than later.”

For the fourth quarter GDP this year, Mapa hasn’t changed his forecast of 5.3 percent compared to an actual 7.1 percent growth in the third quarter and 12 percent in the second quarter.

In the meantime, his quarterly GDP projections for 2022 are all below six percent, or 5.6 percent for the first three months and four percent in the second quarter next year.

By the third quarter 2022 – and this is where most analysts including the Bangko Sentral ng Pilipinas (BSP) expect a return to pre-pandemic levels – his projection is still conservative 5.7 percent and four percent in the last quarter of 2022.

Mapa sees a “Dirty L-shaped” recovery which points to uneven or bumpy path returning to pre-pandemic growth of 6.2 percent.

“The reason why we’re seeing all that choppiness in the data (quarter on quarter) is because of the lockdown. Eventually, we will get to very loose lockdown (restrictions),” he added.

Mapa also questions the previous normal of a GDP seasonality when projecting growth. During the pandemic, he said he’s not seeing the seasonality effect because of the lockdown. Mobility restrictions prevented school events or activities in the second quarter and summer travels in the third quarter. The absence of a seasonality factor also contributes to the volatility of GDP performance on a quarter-on-quarter basis.

But while growth is picking up, Mapa said a six percent level is “not there yet” because unemployment is still high. The government expects unemployment to remain high at 7-9 percent for the next two years.