Oxford Economics, a British think tank, expects the Philippine economy to post a weak growth in the third quarter after a strong expansion in the second quarter because of new quarantine restrictions in Metro Manila.
Oxford Economics said Monday in its latest ASEAN-6 Growth Tracker the Philippines’ growth would likely fall sharply because of another two-week strict lockdown in August.
The report, which sums up growth updates of six ASEAN countries—Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam—pointed to a weak start in the third quarter, following a gradual pick-up in the first quarter and a substantial rebound in the second quarter,
The trackers for Malaysia, Indonesia, and the Philippines suggest third-quarter forecasts may be pessimistic for these countries.
Oxford said the sizeable gap between the forecast and the growth tracker for the Philippines was justified given the strict lockdown imposed in Metro Manila in August.
“The strong end to Q2 with a significant rebound in industrial production in June is unlikely to continue into Q3. Therefore, we expect a sharp reversal in the Philippines’ growth tracker in August, bringing it closer to our Q3 growth forecast,” the report said.
The waning base effect partly explains the downtick in the growth tracker in July, but the coronavirus outbreak in recent months also weighed on ASEAN’s economic recovery, Oxford said.
The global forecasting firm also found out that the surge in COVID cases in the region led to renewed anxiety and tighter government-imposed restrictions from June onwards. Restrictions were either tightened or extended into August for most ASEAN-6 economies, and daily infections were still rising rapidly in Malaysia, the Philippines, and Vietnam.
Mobility restrictions were tightened in Vietnam and the Philippines, while Indonesia and Thailand extended their lockdowns in high-risk areas into August. Malaysia is relaxing measures, though it had not yet managed to contain the recent COVID outbreak. Singapore is also easing restrictions, but only at a gradual pace.
The report noted that “exports and industrial production continued to contribute positively to the tracker, but to a lesser extent than earlier this year. Retail sales dragged on growth across the region in July after a brief rebound.
“We think risks are still tilted to the downside given the ongoing pandemic and low vaccination coverage across most of the region,” it said.
Manufacturing activity also remained depressed, with the ASEAN PMI declining further to 44.6 in July from 49 in June, and remaining largely unchanged at 44.5 in August.