Economists see slower Q4 GDP growth

MANILA, Philippines — More economists are convinced that economic expansion slowed in the fourth quarter of last year due to the impact of the destruction caused by Super Typhoon Odette.

But despite the projected slowdown in the last quarter, economists are confident that the gross domestic product (GDP) for 2021 will still be within the revised five to 5.5 percent growth target set by the Development Budget Coordination Committee (DBCC).

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the country’s GDP growth slightly eased to seven percent in the fourth quarter of last year from 7.1 percent in the third quarter.

Ricafort said Typhoon Odette, which caused serious disruptions especially in hard-hit areas in the Visayas and Mindanao, cut agricultural output and created huge loss in productivity due to disruption in economic activities brought about by the interruption in power, telecommunications, water supply, logistics and supply chains.

Ricafort, however, said the subsequent reconstruction or rehabilitation activities could offset the impact of the typhoon and spur economic activities.

For 2022, Ricafort expects the economy to expand to a range of six to 6.5 percent.

Philippine National Bank’s Alvin Arogo said the Philippines likely posted a slower GDP growth of six percent in the fourth quarter of last year as the relaxation of mobility restrictions during the peak of the Christmas and New Year holidays was likely outweighed by the impact of Typhoon Odette.

Arogo said the Philippines likely booked a GDP growth of 5.2 percent in 2021, falling within the government’s target range.

“Spending on essential items last year likely remained strong, particularly communication. The resumption of elective services likely allowed for a meaningful recovery in health-related spending and miscellaneous goods and services,” he said.

For 2022, the Lucio Tan-led bank sees a stronger GDP growth of 6.6 percent or below the DBCC’s seven to nine percent target range.

“This year, the increase in vaccinations and the perceptible path toward the relatively benign phase of COVID should allow the demand for non-essential items and those that are hampered by social distancing to start recovering at a faster pace,” Arogo said.

PNB believes that the overall economy will likely recover all lost ground by the end of 2022.

Likewise, UnionBank chief economist Ruben Carlo Asuncion said the country’s GDP growth decelerated to 5.2 percent in the fourth quarter of last year from 7.1 percent in the third quarter due to the emergence of the Omicron variant, while the impact of the typhoon last month was offset by a buoyant non-farm GDP growth.

The Aboitiz-led bank believes the country’s GDP grew by 5.1 percent last year, the lower end of the government’s forecast range.

However, it expects the GDP expansion to pick up to 6.2 percent this year, also below the DBCC’s seven to nine percent target range.

“We think that the domestic Omicron surge, like that of those offshore (like South Africa, Scotland, etc.), may impact or freeze the recovery but will be short-lived,’’ Asuncion said.

He said remittances from overseas Filipino workers (OFWs) would remain to be a silver lining as host countries continue to take-in Filipino labor and as the global recovery moves along.

Asuncion said election spending may also work its magic in 2022, but would be limited because of the pandemic and restrictions imposed on huge congregation people and may leave much of candidate and campaign spending via online channels.