Citing the strict coronavirus disease 2019 (Covid-19) pandemic-related lockdown reimposed in April, ING Bank’s local unit significantly downgraded its Philippine economic growth outlook for the second quarter of this year.
Senior economist Nicholas Antonio Mapa of ING Bank Manila said on Friday that the global bank now forecasts second-quarter GDP growth of only 10.9 percent, down from 11 percent earlier.
His new estimate compares to decreases of 4.2 percent and 16.9 percent in the first and second quarters of 2021 and 2020, respectively.
According to Mapa, “All sectors are expected to post growth led by capital formation, government spending and household consumption.”
The Bureau of the Treasury has reported that government spending in the months within the second quarter climbed-on-year in the second quarter, at least in May and June, by 19.15 percent and 13.24 percent, respectively. In April, however, disbursements plummeted by 27.14 percent year-on-year.
Despite the headline grabbing year-on-year rise, Mapa said he expects the economy to contract in the second quarter as tighter mobility restrictions were implemented for the entire month of April and the majority of May.
“The impact of such measures manifested immediately in employment and manufacturing numbers and we expect QoQ (quarter-on-quarter) GDP to have actually contracted by 1.5 percent,” Mapa explained.
With a new lockdown in place this month to limit the highly transmissible Delta strain of the virus, ING Bank Manila sees flat to negative GDP growth in the Philippines in the third quarter as well.
“In a year that started with so much hope for a ‘strong recovery,’ 2021 is indeed turning out to be like 2020 (QoQ GDP swinging from gains to contraction) with the Philippines likely headed for a lower growth trajectory once base effects fade,” Mapa noted.
“Our full year GDP forecast is now at 3.8 percent from 4.7 percent previously, factoring in a 4-week ECQ (enhanced community quarantine) style lockdown in August.”
His full-year projection is lower than the government’s 6-7 percent target, but it is better than the actual 9.6 percent fall in 2020.