A London-based consultancy firm has downgraded the country’s economic growth forecast to 9.5 percent from the previous 11.5 percent due to the rising number of coronavirus disease 2019 (Covid-19) cases and deteriorating economic data.
“We are lowering our 2021 GDP (gross domestic product) growth forecast for the Philippines due to the worsening virus situation and the recent deterioration in the economic data,” said Capital Economics Senior Asia Economist Gareth Leather.
“The seven-day average of new infections has risen to its highest level since September. And a growing proportion of positive test results suggest more cases are now going undetected,” said Leather.
Data from the Department of Health (DOH) showed that the number of Covid-19 cases has been increasing. As of March 13 alone, the Philippines logged 5,000 cases, the highest recorded since August 2020.
This puts the total number of infections at 616,611, of which 56,679 are active cases.
“Although the President is still pushing to reopen the economy, several parts of the country have tightened restrictions. Metro Manila (which accounts for nearly 40 percent of the country’s GDP) will impose an evening curfew for two weeks starting on Monday,” said Leather.
“Meanwhile, the data released over the past week have been disappointing. The recovery in the manufacturing sector appears to have stalled, with output in January still around 10 percent below its pre crisis level,” Leather added.
Leather further said export growth also said that the country’s unemployment rate remained at 8.7 percent in January. This compares with a pre-crisis unemployment rate of 4.6 percent.
“Putting this altogether, our previous expectations for the recovery now look too upbeat. We are lowering our forecast for 2021 GDP growth from 11 percent to 9.5 percent. This would leave the economy over 12-percent smaller than its pre-crisis trend by the end of the year – by far the biggest gap in the region,” said Leather.
Despite the downgrade, Capital Economics latest forecast is still higher than the government’s 6.5- to 7.5-percent 2021 economic growth projection.
It would also be a turnaround from the 9.5-percent contraction last year.