"Let's hope the next announcement would be a good one."
"Let's hope the next announcement would be a good one."
Sensing the sluggishness of economic activity during the first quarter (1Q) of this year, I wrote, toward the end of that period, that the Philippine economy’s performance – as measured by GDP (gross domestic product) growth – in 2021 would largely be determined by the economy’s vigor or weakness in the second quarter (2Q).
June 30 has come and gone and the nation awaits the release of the 2Q GDP figure by PSA (Philippine Statistics Authority) That is tentatively scheduled for August 9.
Why is the 2021 GDP going to be determined by the economy’s 2Q performance?
Given the recurrent COVID-19 infection surges in the NCR (National Capital Region) Plus during the first weeks of 2021 and the very slow rollout of the vaccines; only an inveterate optimist would have dared predict a 1Q economic pickup. In fact, GDP contracted by 4.2 percent during the first quarter. If economic activity were to remain sluggish in the April-to-June period and GDP were to contract anew, the first half of 2021 would be a write-off and the prospects for even modest GDP growth this year would be greatly diminished. There would then be severe pressure on the economy to achieve between July and December growth at least sufficient to compensate for the first semester’s GDP loss. That will be a tall order.
Economic growth doesn’t just happen; a quarter’s economic growth is founded upon the positive economic results of preceding quarters, especially the immediately preceding one. If the first quarter’s 4.2-percent contraction were to be followed – God forbid – by a second-quarter contraction, there would be nothing upon which to build a strong third-quarter economic performance; whatever growth materialized would be minimal at best. The responsibility for achieving modest GDP growth in 2021 would then rest squarely on this year’s final quarter.
What is the coming PSA report on the second-quarter GDP likely to say? Considering the restraining effect on the economy of the on-again-off-again (ECQ) enhanced community quarantine and the slow rollout of the vaccination program, PSA is likely to report minimal or no GDP growth during 2021’s second quarter.
If in fact that will be the 2Q outturn, and given the 4.2 percent contraction in the 1Q, the semester that has just begun will have to carry the ball for the 2021 GDP. It will have a lot of carrying to do. The economic managers have of late been talking about the emergence of “green shoots” of economic revival. However, truth to tell, as July begins there are very few important indications of an economy that is starting to roar back to life. Millions of vaccine doses are scheduled to arrive in this country during the present quarter, but they still are not in the arms of Filipinos. The big hope is that before the onset of the fourth quarter much more than 5 percent of adult Filipinos will have been fully vaccinated. A strong pickup in economic activity will have to take place in 3Q if 4Q is going to be able to give the GDP any chance of achieving a respectable level of growth.
A good number for second-quarter GDP growth is likely to the 2021 performance of the economy. Let’s hope that the number that the PSA will announce next month will be a good one.
