Philippines gets out of recession

Economists see robust Q2 growth

MANILA, Philippines — Economists are expecting a strong bounce back in the second quarter with the gross domestic product (GDP) growth hitting double-digit level as the country managed to recover some lost ground during the review period.

Jun Neri, lead economist at Ayala-led Bank of the Philippine Islands, said the economy likely expanded by 10.6 percent from April to June, ending five quarters of GDP contraction despite the imposition of mobility restrictions in the National Capital Region and nearby provinces or NCR Plus.

“We think growth between the second quarter and the first quarter is possible amid the milder protocols of May and June as major catch up activities in construction and related activities made up for halted activities during the stringent late-March to early-April lockdown,” Neri said.

The pandemic-induced recession extended to five quarter as the GDP shrank by 4.2 percent in the first quarter as NCR Plus was placed under enhanced community quarantine from end- March to mid-May amid the resurgence of COVID-19 infections.

Economic managers earlier lowered the GDP growth forecasts to a range of six to seven percent instead of 6.5 to 6.5 percent this year and seven to nine percent instead of eight to 10 percent next year.

Malacañang placed the NCR and adjacent areas under enhanced community quarantine from Aug. 6 to 20 to slow the spread of the more contagious Delta variant.

“Assuming this new enhanced community quarantine will be the last for the year, we expect the second half to be around six percent which translates to a sub-five percent GDP growth for 2021,” Neri said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the GDP likely grew by 10 percent in the second quarter from the record high 16.9 percent contraction in the same quarter last year.

“Measures to further re-open the economy with NCR at general community quarantine since May 15 would have also supported further pick up in the GDP growth in the second quarter, but offset by the tighter restrictions and quarantine standards since the latter part of March 2021 to curb COVID-19 from spreading further,” Ricafort said.

Ricafort also said other economic drivers from April to June are the increased government spending especially on infrastructure, the country’s biggest stimulus measures so far for the coming years via Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, and more accommodative monetary policy that support relatively low interest rates still near record lows.

The Yuchengo-led bank sees the GDP growing between four and five percent this year with an expansion of six percent in the third quarter and five percent in the fourth quarter.

“The two-week enhanced community quarantine in NCR in an effort to prevent Delta variant from spreading further would be a drag on the third quarter economic growth, though mathematically could still expand due to relatively lower denominator a year ago,” Ricafort said.

UnionBank chief economist Ruben Carlo Asuncion said GDP likely grew by 8.5 percent in the second quarter but the Delta variant could result to a slower economic growth in the second half.

“We had hoped for a positive sequential improvement, but the surge in COVID-19 infections in April caused the economy dragging toward a better growth print. The Delta variant risk is a different story altogether. Initially, we were expecting a more robust second half economic recovery projectile, however, the threat of the said mutation may leave 2021 GDP lower than expected in a worse-case scenario,” Asuncion said.

The Aboitiz-led bank sees the GDP growing by four percent this year.

Lucio Tan-led Philippine National Bank (PNB) and Security Bank see the GDP accelerating by 7.7 percent in the second quarter.