Continued easing of quarantine restrictions can result in a smaller growth contraction in the last quarter of this year, which is projected to pave the way for positive gross domestic product (GDP) growth starting in the first quarter of 2021.
In a virtual briefing on Thursday, Acting Socioeconomic Planning Secretary and National Economic Development Authority (NEDA) Director General Karl Kendrick Chua said the last quarter of the year is seasonally the biggest contributor of annual growth, as measured by GDP, because of the Christmas holidays causing an uptick in consumer spending.
He said domestic output in the last quarter of the year is normally higher by 10 percent compared to the previous three quarters.
“With that, we see a gradual improvement quarter-on-quarter because of the relaxation of the quarantine measures. Next year, we will begin to see a strong positive recovery of around 6.5 to 7.5 percent (in terms of GDP),” he said.
Chua said this projection means that “from a high negative growth or contraction since the second quarter (of this year) we will see the contraction getting smaller and hopefully being to see positive growth starting in the first quarter of 2021.”
“Our projections are based on the assumption, again, that the (Covid-19) vaccine will begin to be available and more widely available in the second half of 2021,” he said.
GDP growth in the first quarter of this year was at -0.7 percent and hit a decade-low of -16.9 percent in the second quarter. Third-quarter output stood at -11.5 percent.
GDP in the first nine months was a 10-percent contraction because of the coronavirus disease 2019 (Covid-19) pandemic.
Full-year contraction is seen to be around -8.5 to -9.5 percent this year but economic managers forecast recovery of between 6.5 to 7.5 percent next year and a higher 8- to 10-percent GDP growth for 2022.