AN OFFICIAL of Sun Life Philippines forecast on Friday a -6.5-percent output for the Philippine economy this year because of the coronavirus disease (Covid-19) pandemic but a recovery of between 5-6.5 percent is forecast for 2021.
In a virtual briefing, Sun Life Philippines chief market development officer Michael Manuel said the -16.5-percent output, as measured by gross domestic product (GDP), in the second quarter is probably the deepest contraction the economy would have this year.
He projects the third quarter and fourth quarter GDP to be at around -6 percent and -3 percent, respectively.
“We are still expecting a u-shaped recovery on our part but certainly not very far from the consensus,” he said, citing the consensus growth forecast of 6.1 percent for this year.
Economic managers’ GDP target for 2020 is a contraction of -5.5 percent while the 2021-22 figure is a recovery of between 6.5-7.5-percent.
Manuel believes that the government’s priority infrastructure program, the Build, Build, Build, will drive economic recovery starting next year.
He said green shoots are starting to show after the economy registered a recession in the second quarter of the year.
He said exports and imports, which dipped starting in the latter part of the first quarter due to lockdown measures both here and overseas, have bounced back although still lower than the pre-pandemic levels.
Imports contracted the most this year last April with a print of -65.3 percent year-on-year. During the same month, exports posted a -50.8 percent annual contraction.
As of last July, the annual contraction in imports is 24.4 percent while it is 9.6 percent for exports.
Manuel said improvements in these numbers are good since import, for one, is a leading economic indicator because the Philippines is an import-dependent country.
He also cited the improvement in remittance inflows from overseas Filipino workers (OFWs).
Cash remittances posted a -4.7 percent, -16.2 percent, and -19.3 percent annual contraction from March to May, respectively but recovered in the next two months with a growth of 7.7 percent and 7.8 percent, respectively.
Manuel said the upturn in remittances is a plus for the economy since about 75 percent of the country’s annual output is driven by consumption.
Meanwhile, he said the negative economic growth due to the pandemic presents positive prospects to the local equities market, noting that markets go through cycles.
“Whenever markets are down it presents one of the biggest opportunities for generating long term growth,” he added. (By Joann Villanueva)
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