The International Monetary Fund on Wednesday upgraded its 2021 growth projection for the Philippines to 4.6 percent from 3.2 percent, taking into account the strong performance in the third quarter despite the COVID-19 pandemic.
It updated the growth forecast ahead of the release of official gross domestic product data by the Philippine Statistics Authority on Thursday.
The PSA earlier reported that the GDP grew 7.1 percent in the third quarter, which was later revised to 6.9 percent, on changes in data on financial and insurance activities, professional and business services and real estate and ownership of dwellings.
“The third-quarter 2021 gross domestic product growth rate was revised downward to 6.9 percent from the preliminary estimate of 7.1 percent. The major contributors to the downward revision were financial and insurance activities, from 6.4 percent to 3.9 percent; professional and business services, from 11.5 percent to 10.6 percent; and real estate and ownership of dwellings, from 4.7 percent to 3.8 percent,” the PSA said.
The PSA also revised downward the gross national income growth in the third quarter to 2.7 percent from 2.8 percent.
IMF resident representative to the Philippines Ragnar Gudmundsson said in an e-mailed message to Manila Standard that economic growth would continue to be strong this year despite the spread of the new COVID-19 variants.
“Real GDP growth in 2021 is now projected at 4.6 percent and has been revised up from 3.2 percent in our October 2021 forecast. This upward revision largely reflects the better-than-expected outturn during the third quarter of 2021, which resulted from the successful implementation of more granular lockdowns and targeted mobility restrictions during the third wave of COVID 19,” Gudmundsson said.
Gudmundsson also said despite the negative impact of Typhoon Odette on agricultural output in particular, the recovery was sustained in the fourth quarter of 2021, underpinned by a continued reduction in the infection rate, lesser mobility restrictions and a higher vaccination rate.
The IMF expects the GDP growth to be faster this year at 6.3 percent. “The Philippine economy is still projected to grow at 6.3 percent in 2022. This is because the carryover from the upward growth revision in 2021 is expected to be canceled out by the rapid spread of the Omicron variant and new quarantine measures in the first quarter of 2022,” Gudmundsson said.
Gudmundsson said the strong growth was expected in the remainder of 2022, “as vaccination proceeds further, policy measures remain appropriately supportive, and private sector confidence improves.”
The latest World Economic Outlook for January 2022 cut the economic growth forecast this year for member countries of the Association of Southeast Asian Nations to 5.6 percent from the previous estimate of 5.8 percent.
The ASEAN-5 groups Indonesia, Malaysia, Thailand, Vietnam and the Philippines.
The IMF said the global economy entered 2022 in a weaker position amid higher inflation and the spread of the Omicron COVID variant.
It said ASEAN-5 likely posted a strong rebound in 2021, with a growth of 3.1 percent after contracting by 3.4 percent in 2020. For 2023, the IMF expects ASEAN-5 to post a faster GDP growth of 6 percent.