Philippine economy likely contracted 5 percent in Q1: economist

ABS-CBN News

Posted at May 10 2021 12:38 PM

Philippine economy likely contracted 5 percent in Q1: economist 1
A woman speaks on her mobile phone while buying at the Paco Public Market in Manila on May 06, 2021. Jonathan Cellona, ABS-CBN News/File

MANILA - The Philippine economy possibly contracted again in the first quarter as the jobs market, demand, borrowing and other indicators remain "repressed," an economist said Monday. 

Gross domestic product could be at -5 percent in Q1, IBON Foundation economist Sonny Africa told ANC. This would be the fifth straight quarter of negative growth for the economy. 

"We’re expecting the first-quarter GDP figures to actually to be at least -5 percent and hopefully not worse. Our main assumption there is that we’re not seeing an improving jobs market, domestic demand is still very repressed, interest rates are at a record low but no one is really borrowing or investing," Africa said.

"I think that’s important because we won’t get a fighting chance of even just 4 to 5 percent GDP growth for the whole year if we do worse than -5 percent contraction for the first quarter," he added. 

Socioeconomic Planning Secretay Karl Kendrick Chua earlier also said that the country was not likely to post positive growth until the second quarter

The economy dropped 9.6 percent in 2020, its worst since the end of World War 2.

The country should watch out for agriculture and construction figures as a large contraction in these sectors are a "sign of more problems down the road," he said.

The Philippine Statistics Authority said the country's agricultural output contracted at an annual pace of 3.3 percent in the first quarter due to a reduction in livestock and poultry production.

Signs of positive growth could start in the second quarter, he said. 

However, the NCR Plus Bubble remains under modified enhanced community quarantine until May 14.

Chua said the country has enough time to "catch up" to meet its growth target of 7.5 percent. 

The PSA is set to announce first quarter GDP figures on May 11.

Despite the improving unemployment numbers, Africa said there are more low-quality jobs being generated which translates to low income and "bad welfare" for Filipino households.

"If the contraction improvement is not commensurate to the jobs increase that implies very low incomes and very low incomes mean unfortunately depressed consumption and depressing demands. So I think that’s one key indicator to look at," he said.

Unemployment figures improved in March to 7.1 percent from 8.8 percent in February with 3.44 million Filipinos jobless.

However, are more informal jobs that are not secured and offer lower salaries. There is also more part-time work than full-time, Africa said.

The Asian Development Bank earlier said although unemployment was back to pre-pandemic levels, the jobs being created are of low quality. This could lead to unstable employment and the rise in skills mismatch, among others, the lender said.

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