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The usual spike in consumer spending over the Christmas holidays likely eased the economic contraction in the fourth quarter of 2020, even as bad weather that pushed prices up faster and prolonged quarantine restrictions dampened demand for goods and services.
Thus, most private sector economists projected that the Philippines’ gross domestic product (GDP) would fall by more than 9 percent amid the COVID-19 pandemic.
Of the 21 economists and financial institutions surveyed by the Inquirer last week, only three estimated GDP from October to December 2020 below 10 percent.
The government will report on GDP performance for the fourth quarter and for the full year 2020 on Thursday, January 28.
The most pessimistic forecast came from Emilio Neri Jr. of the Bank of the Philippine Islands, who expected fourth-quarter production to drop 12.2 percent year-on-year, even worse than the 11.5 percent drop in the third. trimester.
“The major typhoons and floods in October and early November significantly affected the economic performance of the Cagayan Valley and eastern Manila. While not as severe as the 2009 drops in ‘Ondoy’ and ‘Pepeng’, we believe this had a substantial impact on consumer behavior and investments in Metro Manila through the end of November, ”Neri said, referring to the series of strong typhoons that devastated the country before 2020 ended.
In addition, “the increase in food prices was a brake on discretionary spending, as consumers spent a good part of the budget on food during the holidays. [despite] contraction in food manufacturing due to lack of supply of pork to meat processors ”, added Neri.
If Neri’s fourth-quarter forecast is correct, GDP for the full year 2020 could fall by a record 10.6 percent, the worst post-war recession and beyond the government’s estimate of a 8, 5 to 9.5 percent.
Two other economists also see a double-digit GDP contraction in the fourth quarter of 2020: ING’s Nicholas Antonio Mapa and Moody’s Analytics’s Denise Cheok shared the same forecast of 10.4 percent.
The other GDP contraction forecasts for the fourth quarter were: Alvin Ang of the Ateneo de Manila University, 9.8 percent year-on-year; Robert Dan Roces of Security Bank, 9.5 percent; Deutsche Bank’s Michael Spencer and HSBC’s Noelan Arbis, 9 percent; Makoto Tsuchiya of Oxford Economics, 8.7 percent; Alex Holmes of Capital Economics and Michael Ricafort of RCBC, 8.5 percent; Yuanliu Hu of the Institute of International Finance and United Overseas Bank, 8.2 percent; Goldman Sachs, 7.5 percent; ANZ’s Sanjay Mathur, 6.8 percent; Rajiv Biswas of IHS Markit, 6.3 percent; Jonathan Ravelas of BDO Unibank, 6.2 percent; Chidu Narayanan of Standard Chartered, 6.1 percent; Victor Abola and Morgan Stanley of the University of Asia and the Pacific, 6 percent; Sun Life Financial’s Patrick Ella, 5.7 percent, and the lowest forecast of 5 percent by UnionBank’s Ruben Carlo Asunción.
Compared to the 8 percent quarter-on-quarter growth seen in the third quarter from the second quarter low, fourth quarter output was estimated to have grown only about 5 percent or less, according to some of the economists, as the movement people was kept restricted to prevent the deadly coronavirus from spreading further.
As such, 16 of the economists estimated a full-year GDP contraction of over 9 percent, while the other five projected it at more than 8 percent.
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