An economist sees the Philippine economy still growing by 5 to 6 percent in 2021 after posting a smaller contraction in the first quarter partly on increased infrastructure spending.

In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the -4.2 percent gross domestic product (GDP) in the first three months this year is already an improvement from the -8.3 percent in the previous quarter but weaker than the -0.7 percent in the first quarter of 2020.

“(A) 5 to 6 percent GDP growth for 2021 could still be achieved, as a function of measures to reopen the economy from lockdowns in the coming months/quarters, especially with the expected increase in Covid-19 (coronavirus disease 2019) vaccine arrivals that would help reduce new Covid-19 cases and also help justify the further reopening of the economy to increase production, sales, incomes/livelihood, employment,” he said.

The government’s full-year GDP target ranges between 6.5 to 7.5 percent, which some economic managers said may be affected by the enhanced community quarantine (ECQ) implementation from March 29 to April 11 and the modified ECQ imposed until May 14.

Ricafort said the first-quarter output this year may have already reflected the impact of the two-week ECQ this year and the continued decline in agriculture’s output on account of the African swine fever (ASF).

He said the elevated inflation rate also contributed to the negative GDP print.

Average inflation in the first four months this year stood at 4.5 percent, above the government’s 2-4 percent target band until 2023.

However, Ricafort said a better figure may be expected in the second quarter given the low-base effect, with the second quarter 2020 GDP at decades-low -17 percent.

He said drivers of this year’s output include the government’s increased infrastructure spending, which is expected to generate more jobs and open opportunities for businesses; the approval of more tax reform measures; and the further reopening of the domestic economy partly due to Covid-19 vaccination program rollout.

“Another pillar for economic recovery: accommodative monetary policy measures that further keep borrowing costs relatively lower and spur greater demand for loans, investments, employment, and other business/economic activities, as monetary easing measures will do more of the heavy lifting for the economy amid limited government funds for any additional stimulus measures,” he added.