Philippines growth forecasts slashed anew amid latest lockdown

by Lawrence Agcaoili (The Philippine Star), 7 Aug 2021

MANILA, Philippines — Dutch financial giant ING Bank and ANZ Research expect the Philippines to make a slower bounceback from the pandemic-induced recession as stricter lockdown and quarantine measures were reimposed in the National Capital Region (NCR) and nearby provinces.

Nicholas Mapa, senior economist at ING Bank Manila, said the bank further slashed its 2021 economic growth forecast for the Philippines to 3.8 percent from the original target of 4.7 percent despite the projected double-digit growth in the second quarter.

“In a year that started with so much hope for a strong recovery, 2021 is indeed turning out to be like 2020 (quarter-on-quarter GDP swinging from gains to contraction) with the Philippines likely headed for a lower growth trajectory once base effects fade,” Mapa said.

ING Bank factored in a four-week enhanced community quarantine style lockdown in August for its latest GDP growth projection.

It is expecting a 10.9 percent GDP growth from April to June after the pandemic-induced recession stretched to five quarters with a GDP contraction of 4.2 percent in the first quarter.

“In a case of one step forward and two steps back, the Philippines will likely post double digit year-on-year growth but quarter-on-quarter GDP will possibly be negative,” Mapa said.

The Philippines suffered from a record 16.9 percent GDP contraction in the second quarter of last year or during the height of the strict lockdown as the economy stalled when entire Luzon was placed under enhanced community quarantine in mid-March last year.

As a result, the country slipped into recession as the GDP shrank by a record 9.6 percent, ending 21 years of positive growth.

“With the Philippines headed for yet another lockdown, and one that may be more stringent and protracted than the Alpha variant version, we are expecting the Philippines to post flat to negative quarter-on-quarter GDP growth in the third quarter as well,” Mapa said.

President Duterte has placed the National Capital Region and nearby provinces under enhanced community quarantine anew from Aug.6 to 20 to slow the spread of the more contagious Delta variant.

Meanwhile, ANZ Research also lowered its 2021 GDP growth forecast for the Philippines to 4.2 percent from the original target of 4.8 percent and 6.2 instead of 6.5 percent next year as movement restrictions continued to be routinely reimposed or extended.

Sanjay Mathur, chief economist at ANZ, said the Association of Southeast Asian Nations (ASEAN)–the Philippines, Indonesia, Malaysia, Singapore, Thailand and Vietnam– would continue to lag not only the US but also peers in North Asia.

ANZ lowered its GDP growth forecast for ASEAN to 3.9 percent instead of 4.6 percent for this year but retained next year’s forecast at 5.4 percent.

“That the region’s recovery would be subservient to the evolution of the COVID-19 pandemic was the most prominent risk we had flagged for this year. It has unfortunately materialized,” Mathur said.