Private economists see a brighter outlook for the economy based on the latest data showing improved performance in manufacturing, employment, exports and imports.
Economists of First Metro Investment Corp. and University of Asia & the Pacific said in the October 2021 issue of The Market Call that the latest data “paint a brighter outlook for gross domestic product in the third quarter than earlier projected.”
“Surprisingly, the manufacturing sector has shown more exuberance than expected, with more than 400-percent year-on-year gains in June to August. In fact, these months in 2020 posted the lowest figures last year, but the current levels fall short of pre-pandemic levels by just over 5 percent,” they said.
They said that in terms of employment, the sector created 680,000 jobs from November 2020 to August 2021, or more than double those added in the construction sector (383,000) in the same period.
Economists said the greater discipline and regular testing of those in the sector probably aided the robust performance, which export data also supported.
Exports also continued their double-digit growth pace with 17.6 percent in August to average 16.8 percent from June to August, which partly arose from low base effects.
“Strong recoveries in China, the US, Germany and Taiwan have pushed demand for Philippine products. Although the global recovery will likely slow down in the second half, demand from these and other East Asian countries should be sufficient to achieve our projected 15 percent to 18 percent growth in FY 2021,” they said.
The economy created 2.6 million jobs in August, but fell 25 percent short of the lost jobs in July. Total employment increased 11 percent to 44.2 million in August from 39.8 million in October 2020.
“The services sector remained as the laggard in job generation, but that should change for the better starting September 2021 with less restrictions and more vaccinations done especially in Metro Manila Plus,” they said.
Capital goods imports sustained their double-digit growth for the past five months and showed that businesses began to adjust to the new normal, they said.
They also expect inflation to remain elevated, possibly topping 5 percent in October with the lagged local effect of the renewed surge in crude oil prices. They said inflation might settle below 4 percent starting December 2021.
“Monetary policy should remain unchanged for the rest of the year as BSP remains supportive of the growth imperative,” they said.
The government is set to release the third-quarter GDP data on Tuesday.
The Philippine economy grew 11.8 percent in the second quarter from a year ago to end five quarters of contraction amid the challenges of the global pandemic. The Philippine Statistics Authority said it was the fastest in 32 years since the 12-percent growth in the fourth quarter of 1988.
It was an improvement from the revised 3.9-percent decline in the first quarter and 17-percent drop in the second quarter of 2020.
The gross national income expanded 6.6 percent in the second quarter, even as the net primary income from the rest of the world fell 53.8 percent.
In 2020, GDP contracted by 9.6 percent, its worst performance since World War 2. This year, however, the government expects a growth of 4 percent to 5 percent, anchored on the faster pace of vaccination that could boost consumer and business confidence.