NY-based think tank projects Philippine economy to grow by 5.5%

Global Source Partners, a think tank based in New York, is projecting that the Philippines’ economic growth this year will surpass the government’s target ceiling of 4% to 5%.

“The Philippine economy withstood a Delta-driven surge in Q3 [third quarter] and is set to end the year on a high note,” the think tank said in a research note.

“We forecast GDP growth at 5.5% this year and next, bringing domestic output to pre-pandemic levels only by late 2022,” it added.

The economy, as measured by gross domestic product (GDP)—the total value of goods and services produced in a country in a specific period—grew 7.1% in the third quarter, a reversal from a contraction of 11.4% in the same period last year, albeit lower compared to the 12% growth posted in the second quarter of 2021.

The July to September GDP print brought the year-to-date growth to 4.9%, within the upper end of the government’s downwardly revised target band of 4% to 5% for the entire 2021.

Despite the two straight quarters of positive GDP growth, the economy is still 5.7% short of the levels seen before the COVID-19 pandemic hit the country.

In peso terms, the first nine months of 2021 GDP was estimated at P13.32 trillion. This was lower than the P14.1 trillion economic output recorded in the same period in 2019.

Global Source said its outlook was based on two critical assumptions:  “existing vaccines work against Omicron, the latest ‘variant of concern,’ in preventing severe illness; and national and local elections slated for May 2022 are conducted credibly and the results conclusive.”

“Even against this backdrop, the year ahead will be quite challenging, having to contend with all the ills that followed COVID-19 out of Pandora’s box,” the think tank said.

Global Source added that inflation and debt worries were top of mind, “with expected tighter financial conditions globally limiting the maneuvering room for monetary and fiscal authorities and generally raising risks for emerging markets.”

“Too, the US-China trade and technology conflict is lingering, creating additional uncertainties for trade and investments. In this environment, it is the paranoid’s instinct to expect the worst,” it said.

“We are rather clinging to the hope that the midyear political turnover will give rise to good and effective leadership, under which there will be macroeconomic policy continuity and micro/meso level reforms to treat the pandemic’s scars and get the economy back to its pre-pandemic growth path,” it added. — DVM, GMA News