Think tank cuts Philippine growth forecast

MANILA, Philippines — Barcelona-based think tank FocusEconomics expects a slower recovery for the Philippines as the pandemic-induced recession stretched for the fifth straight quarter with a worse-than-expected gross domestic product (GDP) contraction of 4.2 percent in the first quarter.

Alex Petropoulos, junior economist at FocusEconomics, said the think tank has lowered its 2021 GDP growth projection for the Philippines to 6.8 percent from the original forecast of 7.3 percent.

Petropoulos said the GDP contraction in the first quarter was slower than the 8.3 percent recorded in the fourth quarter last year, but was worse than market expectations.

“GDP dropped at a more moderate, albeit still-pronounced, rate of 4.2 percent year-on-year in the first quarter, following the 8.3 percent decline logged in the fourth quarter of last year. However, the result undershot market analysts’ expectations of a three percent contraction,” Petropoulos said.

The Philippines slipped into recession with a record 9.6 percent GDP contraction last year.

Economic managers, through the Development Budget Coordination Committee (DBCC), slashed the GDP growth targets for this year and next year amid the resurgence in COVID-19 infections.

The GDP growth target was lowered to six to seven percent for this year and to seven to nine percent for next year.

The country’s GDP growth is expected to stabilize at six to seven percent in 2023 and 2024.

For 2020, Petropoulos said FocusEconomics expects the Philippines to post a GDP growth of 7.1 percent.