The Philippine economy grew 11.8 percent in the second quarter on a high base effect from a year ago amid the threat of the global pandemic.
The Philippine Statistics Authority said Tuesday the gross domestic product surged 11.8 percent in the April-June quarter, the fastest in 32 years since the 12.0 percent growth in the fourth quarter of 1988.
Government economic managers said the robust performance in the second quarter was driven by more than just base effects. “It is the result of a better balance between addressing COVID-19 and the need to restore jobs and incomes of the people,” they said.
It was an improvement from a revised 3.9-percent decline in the first quarter and 17-percent drop in the second quarter of 2020.
The gross national income expanded 6.6 percent in the second quarter, even as the net primary income from the rest of the world fell 53.8 percent.
National Statistician Dennis Mapa said the GDP growth was driven by the expansion of all sectors, except agriculture.
Data showed that industry and services grew by 20.8 percent and 9.6 percent in the second quarter, respectively. Agriculture, forestry, and fishing contracted 0.1 percent in the same period.
Among sub-sectors, the main contributors to the second-quarter growth were manufacturing, which expanded 22.3 percent; construction, 25.7 percent; and wholesale and retail trade, repair of motor vehicles and motorcycles, 5.4 percent.
On the demand side, household final consumption expenditure improved by 7.2 percent on improving consumer confidence, as millions regained their jobs and income sources in the first half of 2021.
The gross capital formation or investment grew 75.5 percent, driven by the near doubling of private investments growth at 94.9 percent. “This points to improvements in business confidence as the economy learns to live with the virus,” the economic teams said.
Moreover, foreign trade substantially recovered with imports and exports growing at 37.8 percent and 27 percent, respectively. This strong rebound reflects increased domestic demand and the recovery of the country’s partners.
Government final consumption expenditures were down 4.9 percent from a year ago, reflecting the impact of high base from the roll-out of the largest emergency subsidies in the second quarter of 2020.
The PSA said that on a seasonally-adjusted basis, the GDP posted quarter-on-quarter decline of 1.3 percent. GNI recorded 1.5 percent quarter-on-quarter growth.
The second quarter covered a brief period of ECQ and MECQ in March and April. “Our policy to allow both public and private construction even during the enhanced community quarantine period last March and April 2021, shows that we can revive the economy while addressing COVID-19 infections. In particular, public construction expanded further by 49.7 percent, continuing the previous quarter’s growth of 25.3 percent. Private construction also grew by 19.1 percent, a reversal from the last quarter’s contraction of 37.2 percent. These resulted in the overall growth of 25.7 percent for the construction sector,” the economic managers said.
“This is a clear indication that managing risks, instead of shutting down large segments of the economy, stands a far better chance of improving both economic and health outcomes,” they said.
Unlike last year’s ECQ where the government shut down around 75 percent of the economy, the country had much more latitude this year. Most industries and services continued to operate and public transportation also remained available while workers were exempted from the curfew.
“These are supported by mobility data, which shows that visits to public transport stations and workplaces have strongly improved compared to last year,” the economic managers said.
The increase in economic activity has led to more Filipinos regaining their jobs and income. The recent labor force survey results for June 2021 showed that the economy generated an additional 2.5 million jobs compared to the pre-pandemic level, and the quality of employment has improved given the much lower underemployment rate.
The GDP contracted by 9.6 percent in 2020, the worst since the end of World War 2, as the government enforced border restrictions and lockdown to contain the spread of the virus.
Economic managers predicted that the GDP would recover between 6 percent and 7 percent this year, led by the faster pace of COVID-19 vaccination that would reinvigorate consumer and business confidence.
The government, however, placed the National Capital Region under the Enhanced Community Quarantine or the most stringent form of lockdown in August in the face of rising number of new cases of COVID-19 Delta variant.
Metro Manila or the NCR would be under ECQ from Aug. 6 to 20. Economic Planning Secretary Karl Kendrick Chua estimated that the ECQ would result in production and economic losses of P150 billion a week, displace more than 600,000 workers and increase the number of the poor by 250,000.
However, the economic managers said the re-imposition of ECQ in high-risk areas, including NCR from Aug. 6 to 20, is a proactive response to address the spread of the more contagious Delta variant and preclude the return of more lockdowns down the road. “During this period, we will further accelerate the vaccination program. We encourage everyone to use this ECQ period to get vaccinated, so we can safely reopen the economy once we have contained the spread of the Delta variant,” they said.
“The significant improvement in almost all economic indicators highlights the gains from our risk-based approach to quarantines and our strong economic fundamentals. We will continue to accelerate the implementation of our three-pillar strategy to achieve our growth and job targets. First is the acceleration of the vaccination program. Second is the safe reopening of the economy, while strictly adhering to public health protocols. And third is the full implementation of the recovery package,” the economic managers said.
They said that on the health front, “we have continuously increased our hospital, testing, and vaccination capacity and we are in a much better position to combat the spread of the Delta variant. We reiterate our call for everyone to cooperate with the government’s Prevent, Detect, Isolate, Treat, Reintegrate, and Vaccinate strategy.”
The government expects the arrival of over 148 million doses of the vaccine this year. “With this, we are optimistic to inoculate 70 million Filipinos or the entire adult population by the end of 2021. This is a step closer to achieving herd immunity in the country,” the economic managers said.
They said the economy’s recovery would also receive a boost from the 2021 budget, the “Build, Build, Build” program and the implementation of the Corporate Recovery and Tax Incentives for Enterprises or CREATE law.
The economic team also looks forward to the passage of the amendments to the Public Service Act, the Retail Trade Liberalization Act, and the Foreign Investment Act. All these will help attract investments, push up our growth potential, and create more and better jobs.
London-based think tank Oxford Economic said, however, it turned more cautious about the short-term outlook for the Philippines following tightened mobility restrictions and softer exports amid Covid-related regional supply disruptions and weaker demand among some trading partners.
“We will be reviewing our 2021 GDP forecast of 4.8 percent,” it said. “We expect the spread of the Delta virus and tighter restrictions across the region will further delay the economic recovery in Q3. And with less than 10% of the population fully vaccinated, the risks to the outlook are to the downside with growth likely to continue to be held back by Covid-related setbacks until most of the population has been vaccinated, which we do not expect until mid-2022.”
Real Estate News PH
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