Huge rebound expected in Q4
The Philippine economy is expected to have recorded a significant bounce back in the fourth quarter last year amid better mobility and increased consumption.
In its latest weekly brief, Capital Economics said the country’s gross domestic product (GDP) likely grew faster at 7.3 percent in the last quarter of 2020.
The government is set to announce the GDP performance on Jan. 27.
The economy grew 7.1 percent in the third quarter due to low base effects and even as COVID-19 cases surged amid the Delta variant during the period.
On a quarterly basis, Capital Economics projects GDP to grow by four percent, a slight improvement from the 3.8 percent increase in the third quarter.
This means that GDP growth for the whole of 2021 is likely at 5.3 percent.
“The main driver of the rebound in the fourth will have been consumption, as virus cases fell sharply and restrictions were lifted,” economist Alex Holmes said.
“Our mobility tracker was within touching distance of its pre-pandemic level by December. Timely trade data also suggest the external sector had a good quarter,” he said.
During much of the last quarter, Metro Manila and the majority of the provinces were under Alert Level 2, allowing more economic activities.
Daily COVID-19 tally also saw sharp drops, especially in December when daily cases fell to below the 500 mark. The Christmas season likewise pumped up spending and consumption.
However, Capital Economics warned that the economy is expected to hit a snag in the first quarter of 2022.
This is due to the sudden rise in COVID-19 cases, hitting record-highs for many days, amid the spread of the Omicron variant.
“The Omicron wave looks to have put the brakes on the recovery again more recently,” Holmes said.
But he noted that the latest restrictions are much less stringent than previous ones and that significant further tightening of measures is unlikely.
Currently, the country’s mobility tracker has dropped back sharply, as expected, but this is still higher than the last two years of the pandemic.
“South Africa’s experience suggests the economic impact of Omicron is likely to be relatively mild and brief. Overall, we think the recovery is more likely to stall rather than slip into reverse in the first quarter, and should get back on track in the second quarter,” Holmes said.