MANILA (UPDATE 2)- The Philippine economy continued to recover from the impact of the COVID-19 pandemic as gross domestic product expanded 7.1 percent in the third quarter, the state statistics bureau said Tuesday.
The Philippine Statistics Authority said the main contributors to the July to September growth rate were wholesale and retail trade, repair of motor vehicles and motorcycles, manufacturing, and construction..
The Q3 growth rate exceeded forecasts from the private sector which ranged from 6.5 percent to 4.6 percent, and even the 6.2 percent forecast of the Bangko Sentral ng Pilipinas.
For the first three quarters of 2021, the Philippine economy’s average growth rate is now 4.9 percent, and it is on course to hitting the government’s full year growth forecast range of 4-to-5 percent.
BSP Governor Benjamin Diokno said that the stronger than expected growth “increases the likelihood that the revised growth projection of 4 to 5 percent in 2021 would be exceeded.”
ACHIEVING GROWTH AMID LOCKDOWNS
In a joint statement, the country’s economic managers said the stronger than expected growth was the result of observing health protocols, while allowing businesses to continue operating, and rapid rollout of vaccination.
“This careful balancing between COVID-19 and non-COVID-19 needs led to the continued expansion of most sectors,” the joint statement of the economic managers said.
"In the third quarter of 2021, we contained the Delta variant and sustained our economic expansion even as stringent quarantines were in place. Our strategy was correct. The results are clear,” said Socioeconomic Planning Secretary Karl Chua.
However, the third quarter's GDP growth is slower compared to the revised 12 percent GDP growth in the second quarter.
The high growth rates in the second and third quarters were also partly due to low base effects--as the economy started from a low base the previous year, it was relatively easier for it to grow at a faster pace this year.
In 2020 the Philippine economy contracted by 17 percent in the second quarter, and 11.6 percent in the third. For the whole of last year, the economy contracted 9.6 percent, its worst performance since the end of World War 2, largely due to the impact of the COVID-19 pandemic and the mobility restrictions that followed.
NOT YET AT 2019 LEVEL
National Statistician Dennis Mapa also pointed out that the economy has yet to get back to its 2019 level.
Mapa said that in real terms, the country’s GDP in the first 9 months of 2021 was about P13.32 trillion, which was higher by 4.9 percent versus the first 9 months of 2020 which is P12.7 trillion.
But this was still below the country’s GDP in the first 9 months of 2019, which was P14.1 trillion.
“So comparing our 9 months 2021 performance versus the pre pandemic of 2019, we are still down by about 5.7 percent,” Mapa said.
Business groups meanwhile welcomed the unexpected news.
“The third quarter GDP growth was a pleasant surprise given the reimposition of ECQ and the typhoons which occurred during the quarter. It exceeded analysts’ expectations and bodes well for future growth, particularly with the easing of restrictions,” said the Management Association of the Philippines.
“We look forward to a much better GDP performance in the fourth quarter with the easing of quarantine restrictions and the increased consumer spending this Christmas Season,” said the Financial Executives Institute of the Philippines.
Nicholas Mapa, ING Bank senior economist said faster growth may give the BSP room to adjust rates in the first half of next year.
The BSP earlier said monetary tightening was unlikely this year as the risks of raising interest rates too early outweighed the risks of raising them too late.
“The Bangko Sentral Ng Pilipinas will continue to be patient with its accommodative monetary policy stance to support the economy’s full recovery,” Diokno said.
The economy is seen to lose some P41 trillion due to the pandemic in the long term, based on estimates from the National Economic and Development Authority.
But the economy could gain at least P3.6 billion per week with Metro Manila under Alert Level 2, Chua earlier said.