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Friday, March 29, 2024

Re-imposition of lockdown to disrupt Q3 growth–DOF

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Finance Undersecretary and chief economist Gil Beltran said over the weekend economic activities in the third quarter will be impacted by the government’s reimposition of community quarantines to prevent the further spread of the Delta variant of the COVID-19 virus.

Beltran said in an economic bulletin that compared to last year’s, this year’s quarantine measures were more localized.

“The re-imposition of stricter but localized quarantine measures will have consequences on economic activities in the third quarter,” Beltran said.

The government placed Metro Manila and adjacent provinces under enhanced community quarantine from Aug. 6 to 20 amid the rising number of new infections due to the more virulent Delta variant of the virus.

Analysts said there was a high possibility that the two-week lockdown would be extended amid latest reports that the hospital occupancy rate in the capital region and other provinces was rising.

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The International Monetary Fund said it was closely monitoring the latest developments on the quarantine restrictions, saying it posed downside risks to economic growth.

IMF resident representative to the Philippines Yongzheng Yang said in an online briefing Friday that IMF’s growth forecast for the country of 5.4 percent this year might be impacted by these latest developments. He said these could affect mobility and the purchasing managers’ index for manufacturing.

Beltran said the arrival of more vaccine supplies and the ramping up of the vaccination program would help provide individual protection to the population from the virus.

“It is important that the risks posed by the epidemic be effectively managed to minimize the collateral damage on the economy and, consequently, people’s incomes,” Beltran said.

He said the passage of the Corporate Recovery and Tax Incentives for Enterprises Act and the continued infrastructure drive would help the country’s economic competitiveness.

“To complement these, restrictions on foreign participation in the economy should be eased. Amendments to the Public Service Act, Retail Trade Liberalization Act and Foreign Investments Act will improve the country’s standing in mobilizing more foreign capital to the country,” he said.

Beltran said the 11.8-percent GDP growth in the second quarter was mainly a result of base effects from a year ago when the whole country was placed under strict quarantine measures. The expansion was a significant turnaround from the revised 3.9-percent decline in the first quarter and the 17-percent drop a year ago.

Quarter-on-quarter, seasonally-adjusted national income accounts showed that GDP declined by 1.31 percent, largely the result of the mobility restrictions imposed in the NCR Plus Bubble Area.

From the expenditure side, household final consumption increased by 7.23 percent, capital formation by nearly 75.51 percent and exports by nearly 27 percent.

Government consumption decreased by nearly 4.8 percent due to last year’s Social Amelioration Program. Construction activities ramped up in the second quarter, with general government increasing by nearly 50 percent and households by as much as 286 percent.

Investment in durable equipment also increased by 89.19 percent. Of the 11.81-percent GDP growth, general government construction, household construction and durable equipment investments contributed 3.23 percentage points, 3.17 ppts and 2.95 ppts, respectively.

From the supply side, both the industry and services groups posted hefty increases, the former increasing by 20.78 percent and the latter by 9.59 percent. In the industry group, manufacturing and construction activities both posted double-digit growth rates, at 22.34 percent and 25.68 percent, respectively.

In the services group, trade rebounded by 5.41 percent and transportation and hotels, restaurants and real estate, the sub-sectors that suffered very heavily, also partially recovered in the quarter.

The agriculture sector declined by 0.7 percent, largely on account of livestock production declining by 21.54 percent as the effects of the African Swine Fever lingered.

The government projected a 6-percent to 7-percent GDP growth this year, rebounding from the 9.6-percent contraction last year.

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