Economists predict a 6.5 percent increase in GDP.
Domestic GDP is anticipated to continue positive in the third quarter, at 6.5 percent, as low base effects fade and the impact of lockdowns fades, according to an economist.
“GDP (gross domestic product) growth for 3Q (third quarter) 2021 could quantitatively ease year-on-year (from +11.8 percent in 2Q 2021), but still positive at higher single-digit levels, largely due to fading low base/denominator effects,” Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort told the Philippine News Agency in response to questions.
In the first half of the year, the economy grew at a rate of 3.96 percent.
This follows the economy’s return to positive territory in the second quarter of the year, the first time it has done so after five consecutive negative quarters since the first quarter of 2020, when it was -3.9 percent.
Taking Ricafort’s third-quarter prediction into account, average growth as of end-September would be around 4.8 percent, well within the government’s 4 percent to 5% objective for the year.
On November 9, the Philippine Statistics Authority (PSA) will release the third-quarter GDP.
Strong inflows of overseas Filipino workers (OFWs), foreign direct investments, a recovery in exports, imports, and the manufacturing sector, and increased government spending on infrastructure, according to Ricafort, are expected to drive economic growth, especially ahead of the 2022 national elections.
He believes that holiday preparations and election-related expenditures will help improve consumer spending and the economy in the coming months.
“The main economic growth engine would be the economy’s further reopening in light of the change to lower scale lockdowns/Alert Level System to more places outside Metro Manila, which would enable more businesses/industries to return and function at a much higher scale,” he added.
According to Ricafort, resuming operations of more firms would result in higher government income, ensuring cash for pandemic-related activities as well as closing the budget gap and lowering the government’s debt stock.
“Increased vaccination toward population protection, or at least 60-70 percent of the population by the end of 2021, and herd immunity, or at least 80-90 percent of the population by early to mid-2022, would fundamentally help the country win the war against Covid-19 and justify further economic reopening,” he added.
To meet the government’s growth target assumption, Finance Undersecretary Gil Belran said the domestic economy needed to grow by roughly 5% to 5.5 percent in the second half of the year.
“We’re at 3.8 percent currently, so we’ll need a little more than 5% to meet the top end of the target,” he said.