Oxford Economics slashes Philippine growth outlook to 4.5%

MANILA, Philippines — London-based Oxford Economics has turned less optimistic on the Philippines’ growth prospects after it slashed its forecast to 4.5 percent this year, among the lowest projections for the country.

It marked the fourth time Oxford downgraded its gross domestic product (GDP) forecast since the start of the year.

Last month, it expected the Philippine economy to grow at 4.8 percent. Its original forecast was a high of eight percent.

The latest revision falls way below the government’s target of six to seven percent for the year.

Think tanks and international and local banks have been trimming growth prospects for the Philippines following the reimposition of mobility curbs amid surging COVID-19 cases due to the Delta variant.

Oxford senior economist Maya Senussi said the spread of the Delta variant is weighing on the near-term outlook for many emerging markets (EMs) as governments respond to COVID-19 flare-ups by tightening restrictions.

“New outbreaks continue to have an impact on activity and policy across EMs, with tightened restrictions delaying recovery in several countries, particularly in Asia where vaccination rates are generally lower,” Senussi said.

“Consumer activity should normalize once the current waves are contained, although slow vaccination progress raises the risk of a slower rebound,” she said.

For ASEAN 6 – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – GDP growth was also cut to 3.9 percent from last month’s 4.1 percent as recovery prospects dim due to restrictions.

“Although the economic impact of recent restrictions and lockdowns will not be as severe as last year, we expect the recovery in household spending, particularly on services, to stall,” Senussi said.

“We expect exports to hit a soft patch in the coming months due to COVID-related regional supply disruptions, as well as weaker demand among some trading partners,” she said.

With the latest forecast among the EMs, the Philippines will now lag behind in terms of economic growth as compared with India’s 8.8 percent and China’s 8.4 percent. EMs, on average, are expected to post an average 6.8 percent growth.

In the ASEAN region, the country’s GDP is also seen to be lower than that of Malaysia’s 4.8 percent, but higher than Indonesia’s 3.3 percent and Thailand’s two percent amid the spike of COVID-19 cases in the neighboring countries.