Foreign and local analysts further slashed their Philippine economic growth expectations for this year, a day after the government announced that the country’s gross domestic product (GDP) fell by 10 percent in the first three quarters of the year.
Revised GDP forecasts provided by Fitch Solutions, Bank of the Philippine Islands (BPI), Capital Economics, ING Bank Manila and Rizal Commercial Banking Corp. (RCBC) analysts ranged from -8.1 to -10.8 percent.
Fitch Solutions projects the economy to shrink by 9.6 percent this year, worse than its previous outlook of 9.1 percent, believing that “the Philippine economy will struggle to maintain its recovery momentum in Q420 (fourth quarter 2020), as domestic containment measures weigh on activity and demand.”
BPI, meanwhile, revised its full-2020 growth projection downward from -8.1 percent to -9.3 percent.
“More or less, the economy needs more than -10 percent in [the fourth quarter]…to avoid a full-year double-digit contraction. Given the behavior of the leading indicators that we’re monitoring, it’s possible for the economy to minimize its contraction in” the last quarter, BPI Vice President and lead economist Emilio Neri Jr. said.
Capital Economics sees a 9.5-percent contraction this year, deeper than its previous forecast of 8 percent.
“The Philippines saw a lackluster rebound in GDP in [the third quarter] and improvements are likely to be harder to come by in the quarters ahead. Output is unlikely to regain its pre-crisis level until late next year,” said Alex Holmes, Capital Economics economist for Asia.
ING Bank Manila also adjusted its full-year domestic output assumption to -10.8 percent, worse than its previous estimate of -9.9 percent.
“With unemployment still elevated at 10 percent and business sentiment negative, according to the Bangko Sentral ng Pilipinas, we do not expect a quick rebound in growth, with GDP remaining in [the] negative territory until a base effect-induced bounce in [the second quarter of] 2022,” said Nicholas Antonio Mapa, the bank’s senior economist.
RCBC forecasts an average GDP contraction of 9.5 percent to 10 percent, worse than its earlier -5 percent to -7 percent outlook.
“GDP contraction [in the fourth quarter of] 2020 could narrow [or] improve, even better than -10 percent (at around -8 percent to -9 percent), in view of the pick-up in spending by both businesses and consumers for the Christmas season,” RCBC chief economist Michael Ricafort said.
The latest outlooks are worse than the government’s revised assumption of a 5.5-percent GDP fall for 2020.