Bank of the Philippine Islands, the third-largest lender in terms of assets, is optimistic the recession experienced by the Philippines due to the COVID-19 pandemic is over and that a 6-percent economic growth could be expected in 2021.
BPI Asset Management and Trust chief investment officer Smith Chua said in an online event Friday there were indications the recession was over, judging from the gradual recovery of the economy that posted a lesser 8.3-percent contraction in the fourth quarter, an improvement from the 11.4-percent decline in the third quarter.
“The economy is opening… Is it something that we can look forward to…,” Chua said.
“Our GDP may grow by 6 percent this year…we are fine-tuning our numbers,” he said.
However, he said much of the economic recovery would hinge on the rollout of the vaccines this year.
Chua said supporting the recovery of the economy were the manageable inflation environment, the government’s higher fiscal spending and the monetary policy support from the Bangko Sentral ng Pilipinas.
“Inflation will remain benign this year and may average 3.2 percent from 2.6 percent last year. Also, the support that we are seeing from the BSP is there… The government is providing fiscal spending to the tune of P4.5-trillion,” Chua said. “These are measures intended to provide economic support,” he said.
Chua said the expected economic recovery would favor more the equities than fixed income market.
The Philippine Statistics Authority reported Thursday that the economy contracted 9.5 percent in 2020, the worst on record since the government started collecting gross domestic product data in 1946, a year after the Second World War ended.
The decline surpassed the 7-percent contraction posted in the latter part of the Marcos administration in 1984. Factors that contributed to the decline were the prolonged COVID-19 pandemic and a string of natural disasters such as the Taal Volcano eruption in January and strong typhoons in the fourth quarter.
The agriculture sector declined by 2.5 percent in the fourth quarter and -0.2 percent for the full year. Industry fell 9.9 percent in the fourth quarter and -13.1 percent for the entire year. Services, meanwhile, contracted 8.4 percent in the fourth quarter and -9.1 percent the whole year. Julito G. Rada
The 2020 GDP hit the upper end of the government’s earlier forecast range of 8.5 to 9.5 percent contraction for the whole year and below the International Monetary Fund’s -9.6 percent forecast for the year.
The interagency Development Budget Coordinating Council expects the GDP to bounce back by 6.5 percent to 7.5 percent in 2021 and 8 percent to 10 percent in 2022.