British bank expects GDP to grow 6.1% after slump

Standard Chartered Bank expects gross domestic product to rebound with a 6.1-percent growth this year from an expected slump of 8.9 percent in 2020 amid the COVID-19 pandemic.

Standard Chartered economist for Asia and the Philippines Chidu Narayanan said in an online briefing Friday the economy would continue to recover beginning the fourth quarter of 2020.

“We expect a 6.1-percent growth in 2021 to be driven by public investment and higher fiscal spending of the government,” he said.

Narayanan, however, said private investment might continue to remain “very low.”

He said to achieve that level of growth in 2021, jobs should return to the pre-pandemic levels and business activity should increase.

“These two factors should come back... Daily COVID infections must also be under control,” he said.

He said while consumption was expected to pick up this year, it would remain subdued. “Consumption will pick up but not so much,” he said.

Narayanan said from an 11.5-percent GDP contraction in the third, the fourth-quarter GDP was expected to settle at -6.1 percent.

He said GDP was expected to show positive numbers beginning the first quarter of 2021 with a 2.1-percent expansion.

Narayanan said remittances were expected to post a mild contraction in 2020.

He said remittances might grow within a range of 3 percent to 5 percent in 2021. “That will support consumption in 2021,” he said.

Narayanan said the Bangko Sentral ng Pilipinas might not reduce the policy interest rate this year, as inflation is expected to remain within the target range of 2 percent to 4 percent.

The BSP last month decided to keep the overnight borrowing rate at a record low of 2 percent, taking into account the manageable inflation rate which averaged 2.6 percent last year.

Topics: Standard Chartered Bank , gross domestic product , COVID-19 pandemic
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