Most private sector economists are becoming generally pessimistic about the economy amid the lingering global health crisis, the Department of Finance said Friday.
The department issued the statement after private sector economists made wrong economic growth forecasts in the second quarter, missing the 11.8-percent year-on-year expansion which was the fastest since the 12 percent registered in the fourth quarter of 1988.
“No one among the 20 analysts polled…correctly forecast this rate of growth—the closest is the 11.7 percent outlook by ANZ Research,” the DOF said in an economic bulletin.
It said the projections showed that forecasters “were generally pessimistic” about the prospects of the economy to rebound from the impact of the COVID-19 pandemic. The mean of the 20 forecasts was 9.6 percent—or 2.2 percentage points below the actual level. The median was also 10.55 percent, or 1.25 percentage points away.
“The range of forecasts is also wide—12.2 percentage points from the lowest, at 3 percent, to the highest at 15.2 percent. This implies high uncertainty of the economic environment forecasters are looking at,” the DOF said.
It said the main reason for the pessimistic forecast in the second quarter was the result of the previous quarter’s estimates. The first-quarter GDP declined 3.9 percent, an upward revision from the previous estimate of -4.2 percent.
“Again, no one forecasted the actual correctly. The closest is Ateneo Center for Research & Economic Development at -3.8 percent, just 0.1 percentage point away,” the DOF said.
It said the mean of the first-quarter forecast was -2.3 percent and the median was -2.55 percent, both more optimistic than the actual outturn and 1.6 and 1.35 percentage points, respectively, away from the actual mark.
“Forecasters tend to become more pessimistic when their most recent optimistic forecasts did not materialize,” the DOF said.
The interagency Development Budget Coordination Committee lowered the 2021 GDP growth forecast to a range of 4 to 5 percent from the previous estimate of 6 to 7 percent, taking into account the lockdowns in August that were expected to impact the third-quarter GDP.
The DOF said the rise in new infections, which led to the NCR Bubble Plus restrictions in the second quarter and the recent spread of the Delta variant, which led to the reinstitution of ECQ in NCR, led forecasters to lower their growth outlook.
The International Monetary Fund also reduced its 2021 growth outlook on the Philippines from 6.9 percent to 5.4 percent.
“Forecasters will be looking at the success of health interventions in curbing the virus when revising their forecasts. They will be monitoring the growth of daily infections, which has risen to more than 13,000 and the vaccination rate, which has peaked at about 700,000 per day,” the DOF said.
It said the performance of health interventions would determine the GDP outlook in the quarters ahead.
The economy contracted by 9.6 percent in 2020, the worst since the end of the Second World War, because of the global health crisis.