Singapore-based DBS Group Research expects the Philippine economy to contract by 9.5 percent this year after factoring in the country’s latest gross domestic product (GDP) figures and a “sequential rise” in the last quarter.
In a report on Wednesday, the research arm of the DBS Group said the extended quarantines and other restrictive measures imposed in the country to contain the coronavirus disease 2019 (Covid-19) pandemic depressed growth in the first three quarters of the year.
The Philippines remained in recession after domestic output slid by 11.5 in the third quarter, 16.9 percent in the second and 0.7 percent in the first. This brought the contraction in GDP to 10 percent in the first nine months.
The DBS unit noted that the National Capital Region — which accounted for more than half of all Covid-19 cases in the country — make up a third of overall output.
“Our assumption for a sequential rise in 4Q (fourth quarter) GDP will see 2020 wind down with -9.5-percent annual growth,” it said.
The DBS Group Research’s outlook hits the upper end of the government’s revised assumption of a 8.5- to 9.5-percent contraction in 2020, and matches those of S&P Global Ratings and Capital Economics.
It is worse than the Atram Group’s 9.2 percent, Fitch Solutions and ANZ Research’s -9.1 percent, Sun Life Philippines’ -8.8 percent, the International Monetary Fund’s -8.3 percent, the Asian Development Bank’s -8.5 percent, the World Bank’s -8.1 percent, and Moody’s Investors Service’s -7 percent.
But it is better than the Bank of the Philippine Islands’ -11 percent, ING Bank Manila’s -10.8 percent, Rizal Commercial Banking Corp.’s -9.5 percent to -10 percent, Security Bank Corp.’s -9.9 percent; Nomura’s -9.8 percent, Fitch Ratings’ -9.6 percent,
For 2021, DBS Group Research said the domestic output could recover by 7 percent after it factoring in base effects and the continued relaxation of restrictions.
This forecast lands within the government’s official forecast range of 6.5 to 7.5 percent.
The “worst of the pandemic-led slump is likely behind the economy [now] as restrictions continue to ease, aiding mobility and economic activity,” it said, but warned that the path to a rebound next year would “be bumpy, as a resurgence [of Covid-19 cases] could necessitate stricter quarantine measures.”
It also warned that recovery would be tentative, given the uncertainty over income and employment, which weighed on household balance sheets.
Latest state data showed that unemployment fell to 8.7 percent in October from 10 percent in July. The underemployment rate — the proportion of employed persons wanting additional work — reached 14.4 percent in the 10th month, better than July’s 17.3 percent but worse than October 2019’s 12.8 percent.
Money sent home by overseas Filipino workers (OFW) in the first 10 months of the year, meanwhile, reached $27.34 billion, a 1-percent dip from $27.61 billion in the same period in 2019.