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The Bank of the Philippine Islands (BPI), led by Ayala, expects the domestic economy to rise steadily in the fourth quarter of 2021, thanks to the widespread adoption of technology in manufacturing and other economic activities.

Despite the lockdowns in August and September last year, the domestic economy grew by 7.1 percent in the third quarter, according to a report released on Tuesday by the bank.

“The economic impact of the epidemic has been reduced by consumer and business adjustments.” The increased use of technology in manufacturing and other economic activity has aided the recovery, according to the report.

The third quarter of this year’s gross domestic product (GDP) growth was lower than the upwardly revised 12 percent in the previous quarter.

Despite the most stringent movement restrictions, the enhanced community quarantine (ECQ) from August 6 to 20 and the modified ECQ till September 7, GDP exceeded forecasts.

GDP growth has averaged 4.9 percent so far this year, close to the higher half of the government’s 4 percent to 5% growth forecast for the year.

The domestic economy’s output is currently at 94 percent of its pre-pandemic level, according to the report.

“By 2H (second half) 2022, (the economy) will have fully recovered,” it stated.

The 7.1 percent increase in household consumption was credited in part to the economy’s development in the third quarter of 2021, according to authorities.

Household consumption growth was “partly driven by the spread of e-commerce,” according to the BPI research.

“Consumers continue to prioritize essential items in their spending, with food, housing, and utilities accounting for 52 percent of total consumer spending in 2021 compared to 45.5 percent in 2019,” according to the report.

Meanwhile, transportation, recreation, restaurants, and lodging spending are still approximately 40% lower than pre-pandemic levels, according to the research.

“Mobility and dining-in capacity limits are to blame.” Spending on these things may take more than two years to return to pre-pandemic levels,” it noted.

The bank predicts that growth will increase by 5.1 percent this year, and 7.3 percent in 2022.

“The experience of the preceding 11 months has taught us that economic growth can be achieved in the midst of a pandemic, as the economy will likely respond,” it stated.

“Another increase in Covid-19 cases is possible in the next 12 months,” it warned, “although the economic impact will likely be less severe given the availability of vaccines and therapies.” “Moreover, technology has advanced tremendously, resulting in a considerable contribution to the recovery.”

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