More economists adjust Philippines 2021 growth targets


More economists are adjusting their growth forecasts for the Philippines this year mainly on account of the stronger-than-expected gross domestic product (GDP) performance in the third quarter.

Jonathan Koh, economist for Asia at Standard Chartered Bank, said the bank has raised its GDP growth forecast for the Philippines to five percent from an earlier estimate of 4.6 percent for 2021.

“We raise our 2021 GDP growth forecast to five percent from 4.6 percent to reflect strong Q3 growth,” Koh said.

The updated forecast of Standard Chartered is now at the upper end of the four to five percent target set by the Development Budget Coordination Committee (DBCC) for 2021.

For DBS Bank Ltd. economist Chua Han Teng, the country is on a path to moderate recovery as it likewise revised upward the projected GDP growth to five percent instead of 4.2 percent for this year.

“The Philippine economy returned to its recovery path in the third quarter after the second quarter’s setback. In our view, the third quarter performance was resilient, despite the worst COVID-19 outbreak that drove a reimposition of stringent lockdowns in August, especially in the economically important NCR,” Teng said.

Standard Chartered’s Koh said economic prospects in the Philippines should improve in the year ahead and domestic vaccination progress is key.

“The economy should continue its recovery path as the COVID situation improves amid rising vaccination, leading to looser restrictions. Daily cases averaged 2,100 over the past week, versus 20,000 cases at the peak in the third quarter, and mobility levels are at their best since the pandemic began,” he said.

Standard Chartered said it expects the Bangko Sentral ng Pilipinas (BSP) to maintain its accommodative stance to support the growth recovery, as inflation appears to have peaked and is expected to moderate further from November as low base effects dissipate.

DBS, meanwhile, said it sees the cyclical recovery in private consumption to pick up with a faster improvement in the second half of next year.

“Private consumption should be supported by further improvements in mobility and economic reopening, coupled with better labor market conditions, with vaccinations reaching a critical mass,” Teng said.

However, the Singaporean bank said the balance sheets of Filipino households worsened over the course of the pandemic, potentially leaving a deep scar that would prevent a sharper uptrend.

BSP Governor Benjamin Diokno earlier said the lowered GDP growth target of four to five percent set by the DBCC could be exceeded after the strong performance in the third quarter.

“The stronger than expected growth increases the likelihood that the revised growth projection of four to five percent in 2021 would be exceeded,” he said.


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