GDP likely fell again in Q1 – poll

Localized lockdowns have been implemented due to the growing number of coronavirus cases. – STAR PHILIPPINE / MICHAEL VARCAS

The PHILIPPINES gross domestic product (GDP) has probably declined at a slower pace in the Fifirst three months of 2021 compared to previous quarters, a Business world A poll showed that a further rise in coronavirus infections and a tighter lockdown imposed in metro Manila and adjacent provinces held back the recovery.

A Business world a poll of 18 analysts found a median decline in GDP of 2.6% for the Fifirst quarter, down from -8.3% in the fourth quarter of 2020, but still slower than the -0.7% in Fifirst quarter of 2020.

If realized, it would be the slowest drop since the first quarter of last year, when Luzon was placed under the strictest form of lockdown from mid-March.

GDP growth forecast for the first quarter of 2021

The survey’s first quarter GDP forecast is well below the government’s target range of 6.5% to 7.5%. Economic officials are expected to meet this month to assess the impact of the new lockdowns on growth targets.

From March 29 to April 11, Metro Manila and the provinces of Bulacan, Cavite, Laguna and Rizal were placed in enhanced community quarantine (ECQ). The zones are currently under the modified less restrictive ECQ (MECQ) until May 14.

The Philippine economy suffered its worst annual contraction in 2020 at 9.5%, according to the Philippine Statistics Authority (PSA) which began collecting data in 1947. The last three months of 2020 saw a drop of 8 , 3%, an improvement compared to -11.4% revised in the third quarter and the record of -16.9% in the second quarter.

The first quarter of 2021 is expected to be the fifth consecutive quarter of GDP contraction. It would be the longest recession in the Philippines since the Marcos era, when the economy contracted for nine consecutive quarters from 1982 to 1985.

While differing on first-quarter economic performance, analysts agreed that the more stringent lockdowns recently imposed in the capital region have had an impact on the recovery.

“We initially expected 0.5% GDP growth [in the first quarter] prior to the recent implementation of new restrictions. Additionally, we believed there had been no significant improvement in consumption, especially household demand, ”said Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, Inc. , which estimated a 3.6% drop in Fifirst three months of the year.

“Non-discretionary consumption has been stable, with improvements in discretionary spending, but not enough to pull the economy out of the red,” he added.

ING Bank NV Manila Senior Economist Nicholas Antonio T. Mapa cited a 3.5% contraction in the first quarter, noting that household consumption should “have been called into question at the start of the year” with the consumerFidence remaining “deep in the red”.

“Recently released labor market data [last week] showed that unemployment improved slightly in March, but was mostly still high from last year’s levels. High levels of unemployment and underemployment translate into depressed consumption all the moreflation rose to 4.5% over the period, ”said Mr. Mapa.

Preliminary results from the March 2021 PSA Labor Force Survey showed an unemployment rate of 7.1% during the month, the lowest since January 2020’s 5.3% as well as the record 17, 6% posted in April 2020. The underemployment rate – the proportion of those already working but still looking for more work or more working hours, improved to 16.2% in March from 18, 2% in February.

Separate PSA data showed an average headline inflation of 4.5%, slightly above Bangko Sentral ng Pilipinas’ target of 2-4%, as well asflforecast 4.2% for the year.

Economists, however, see divergent prospects for the second quarter and the rest of the year amid uncertainty over the COVID-19 pandemic.

Asian Institute of Management economist John Paolo R. Rivera said the ongoing foreclosure and further delays in social improvement “have persisted thffand that the economic recovery this year will depend on the pace of the mass immunization program.

“However, I expect over the next few quarters that the steep decline we experienced in 2020 will recover in 2021, albeit on a slower recovery path before we finally close the negative growth rates. Annual growth for 2021 is estimated to be around 5% assuming vaccination against herd immunity will not be interrupted so that quarantine restrictions can be relaxed, ”said Rivera, who forecast a drop of 3, 6% in the first trimester.

Robert Dan J. Roces, chief economist of Security Bank Corp., who estimated FiFirst quarter GDP fell 3.5%, expects growth in the coming quarters “to gradually improve and will be a function of improving business and consumers.Fidence ”, possibly due to a wider deployment of immunization and increased infrastructure spending.

“Reimposed lockdowns … can complicate the picture of overall growth, and the Philippines risks missing the 6.5-7.5% GDP growth target this year after the lockdowns …” Roces said.

National Bank of the Philippines research director Alvin Joseph A. Arogo sees “significant downside risks” in the Fifirst half, but noted a successful reduction in new daily COVID-19 cases in the coming weeks and accelerated vaccination deployments “could allow for better growth” in the second half of the year.

“This should facilitate our GDP growth forecast for the full year. [of 5% year on year] to stay intact, ”he said.

The health department reported an additional 7,174 infections on Sunday, bringing the number of active cases to 61,294. Lourdes O. Pilar

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