Standard Chartered Bank on Thursday raised the 2021 growth forecast for the Philippines from 4.6 percent to 5 percent, following the 7.1-percent expansion in the third quarter despite the prolonged impact of the pandemic.
Jonathan Koh, the bank’s Asia economist, said in a report the 3.8-percent quarter-on-quarter growth in the third quarter surpassed expectations and reversed the 1.4-percent quarter-on-quarter decline in the second quarter.
He said the gross domestic product growth on a year-on-year basis eased to 7.1 percent in the third quarter from 12.0 percent in the second quarter as the low base effect faded.
“We raise our 2021 GDP growth forecast to 5.0 percent from 4.6 percent to reflect strong Q3 growth. Our forecast is at the upper bound of the government’s 4-5 percent forecast range,” Koh said.
He said the economy should continue its recovery path as the COVID situation improved amid rising vaccination, leading to looser restrictions. Data showed that daily cases averaged 2,100 over the past week from 20,000 cases at the peak in the third quarter, and mobility levels werte at their best since the pandemic began.
“Vaccination progress is key to Philippines’ recovery, with vaccination still low; only 27 percent of the population was fully vaccinated as of Nov. 8, although Metro Manila has fully vaccinated 85 percent of its population,” he said.
He said logistical challenges and vaccine hesitancy were the key issues facing the government, with vaccine supply no longer a bottleneck, with 110.6 million doses already delivered, but only 65 million doses were administered so far.
“We expect the central bank to maintain its accommodative stance to support the growth recovery. Furthermore, inflation appears to have peaked and we expect inflation to moderate further from November as low base effects dissipate,” Koh said.
Fitch Solutions Country Risk and Industry Research, a unit of Fitch Group, also revised upward its GDP growth forecast for the Philippines this year to 4.5 percent from 4.2 percent previously, on the back of the economy’s strong showing in the third quarter and the expected sustained recovery of private spending.