MANILA – Domestic growth is expected to remain in positive territory for the third quarter at 6.5 percent amid the diminishing low base effects and the impact of lockdowns, an economist said.
“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 said in a reply to questions from the Philippine News Agency.
GDP in the first half of the year stood at 3.96 percent.
This, after the economy grew to positive territory in the second quarter of the year, the first after five consecutive negative prints since the first quarter of 2020, from -3.9 percent in the previous quarter.
Taking into consideration Ricafort’s third-quarter forecast, average growth as of end-September would be around 4.8 percent, within the government’s 4 percent to 5-percent target for this year.
The Philippine Statistics Authority (PSA) is scheduled to report the third quarter GDP on Nov. 9.
Ricafort said economic growth is expected to be driven by the strong inflows from overseas Filipino workers (OFWs), the foreign direct investments, recovery in exports, imports, and the manufacturing sector, and increased government spending on infrastructure, especially ahead of the 2022 national polls.
He said preparations for the Christmas season and election-related spending could help further boost consumer spending and the whole economy in the coming months.
“The biggest economic growth driver would be the further reopening of the economy in view of the shift towards smaller scale lockdowns/Alert Level System to more areas outside Metro Manila that would enable more businesses/industries to reopen and operate at a much higher scale,” he added.
Ricafort said resumption of operations of more businesses would also result in higher revenues for the government, which would ensure available funds for pandemic-related programs as well as narrow the budget gap and lower the government’s debt stock.
“Increased vaccination towards population protection or at least 60-70 percent of the population as early as the latter part of 2021 and towards herd immunity or at least 80-90 percent of the population by early to mid-2022 would fundamentally help the country win the war vs. Covid-19 and justify further reopening of the economy,” he added.
Finance Undersecretary Gil Belran said the domestic economy needs to grow by around 5 percent to 5.5 percent in the second half of the year to hit the government’s growth target assumption.
“We are now at 3.8 percent so it should be a little above 5 percent to be able to hit the higher-end of the target,” he said. (PNA)
