MANILA - The Philippine economy is off to a "slow start" in 2021 and will only see positive year-on-year growth by the second quarter of the year, the country's acting socioeconomic planning official said on Friday.
"This year will be a slow start, and we will ramp up by the middle of the year starting the second quarter. So let's be realistic. In the first quarter, nothing significant [will] change," said Socioeconomic Planning Secretary Karl Chua, director-general of the National Economic and Development Authority (NEDA).
He said the biggest economic drivers are still under a general community quarantine (GCQ), second to the most relaxed of lockdown protocols as the COVID-19 pandemic persists.
Metro Manila and other provinces will continue to be under GCQ from Feb. 1 to 28 as the government seeks to contain the spread of the new variant of COVID-19 in the country.
Under GCQ, "at least 70 to 80 percent" of Filipinos are back to work, while transport and infrastructure development is moving, Chua noted.
"So those will continue to improve upon our growth quarter on quarter. Of course, we don't have a crystal ball in NEDA. I cannot tell you what is the optimal amount, but quarter-on-quarter looks very promising," he said.
For his part, ING Bank Manila economist Nicholas Mapa agreed that quarter-on-quarter growth suggests "economic activity slowly coming back to life."
"Despite these gains, the Philippines will likely remain in recession in the early part of 2021 as the “Big Dip” continues," Mapa said.
He added that stock market players have already priced in a double-digit surge for the second quarter, "owing largely to the low base set by the previous year's performance."
On Friday, the benchmark PSE index fell 3.5 percent as foreign funds sold off local shares on IMF's downgrade forecast from 7.4 percent to 6.6 percent for the Philippine economy this year.
Economic managers are betting on a 6.5 to 7.5 percent GDP growth this year, looking to a strong comeback from the 9.5-percent contraction for 2020— the country's worst performance since World War 2.
Growth this year, Mapa said, will be driven by the further reopening of the economy, ramping up big-ticket infrastructure projects, and monetary authorities keeping rates at record lows despite spikes in inflation.
He noted that inflation would be a challenge this year and that food and utility prices continue to rise, haunted by last year's typhoons, the African Swine fever and higher global energy prices.
ING Bank Manila is expecting inflation to settle at the upper area of Bangko Sentral's 2 to 4 percent target range, and may go above it in as early as April or May.