Dutch banking giant ING has slashed its 2021 economic growth forecast for the Philippines to 4.7 percent amid prolonged COVID-19 quarantine and a slow vaccine rollout. In a June 10 report, ING Asia-Pacific research head Robert Carnell said they cut their gross domestic growth (GDP) growth forecasts for India, Japan, the Philippines, Taiwan and Thailand due to extended movement restrictions which “do most of the damage to economies.” ING’s outlooks for Malaysia and Singapore were also “under review for downgrade.”
In the case of the Philippines, ING’s latest projection was lower than its previous 5-percent growth forecast. It was also below the government’s downgraded target range of 6-7 percent.
ING noted that while restrictions in Metro Manila had been eased to general community quarantine (GCQ), 14 provinces moved to stricter modified enhanced community quarantine (MECQ).
Also, the share of fully and partly vaccinated Filipinos to total population remained below 5 percent as of June 3 — one of the lowest in the region, only better than Thailand and Vietnam, ING data showed.
Sought for more comment, ING Philippines senior economist Nicholas Mapa attributed their less optimistic outlook for the Philippines to the “disappointing” outturn in the first quarter, when GDP declined 4.2 percent year-on-year, extending the pandemic-induced recession to five straight quarters.
In the second quarter, ING expects year-on-year growth of 11 percent, slower than the previous expectation of a 14-percent increase.
“Second-quarter GDP could post negative quarter-on-quarter growth after the lockdowns. Although less stringent than the ECQ [enhanced community quarantine] in 2020, indicators such as PMI [purchasing managers’ index] and unemployment reflect less vibrant economic activity in the second quarter compared to the first quarter,” Mapa said.
The PMI reverted to negative territory in April and May due to the stricter lockdowns in National Capital Region (NCR) Plus, which accounted for half of the economy as it hosted many manufacturers within economic zones.
The more stringent measures also brought the unemployment rate to 8.7 percent or about 4.14 million Filipinos without jobs.
“Consumption will likely be constrained by high unemployment and above-target inflation. Investments will be better, but not by much as bank lending is negative,” Mapa added.
End-May inflation averaged 4.4 percent — above the government’s target band of 2-4 percent, no thanks to more expensive food, especially pork.
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