Oxford raises Philippines' GDP forecast to 4.6%

MANILA, Philippines — The Philippine economy is seen growing 4.6 percent this year following the stronger than expected performance in the third quarter and as recovery continues to pick up pace.

In an email to The STAR, Oxford Economics assistant economist Makoto Tsuchiya said the think tank further hiked its gross domestic product (GDP) prospects for the Philippines this year.

After the past six downgrades, Oxford significantly raised its GDP forecast to 4.6 percent from 3.4 percent. However, its original forecast was a high of eight percent.

“While we do not expect a repeat of the strong third quarter GDP outcome, we expect the recovery to continue in the fourth quarter and become more broad based in 2022, as easing restrictions will boost confidence and activity,” Tsuchiya said.

The economy in the third quarter grew stronger than expected at 7.1 percent year-on-year and 3.8 percent on a quarterly basis.

Oxford’s latest forecast now falls within the government’s four to five percent target for 2021.

The government economic team already said the government is on track to hit the upper end of the target. Year-to-date growth currently stands at 4.9 percent.

“Despite headwinds from slower China growth, we expect robust foreign demand to support exports growth,” Tsuchiya said.

But he also warned that low vaccination rate, as well as prolonged global supply disruptions are downside risks to the current outlook.

Nonetheless, vaccine progress in Southeast Asia has been encouraging, another think tank, Capital Economics, said.

“Malaysia has been the frontrunner, but the rest of the region is catching up. Progress in the Philippines has been more gradual,” it said.

So far, the Philippines has administered nearly 75 million doses and vaccinated at least 37 percent of the population.

Meanwhile, Oxford said activity appears to be rebounding strongly across ASEAN and parts of Latin America amid easing of health restrictions.

With the latest forecast, among the emerging markets (EMs), the Philippines will still lag behind in terms of economic growth, as compared with India’s 7.9 percent and China’s eight percent. EMs, on average, are expected to post a 6.6 percent growth.

In the ASEAN region, the country’s GDP is now seen to be higher than that of Malaysia’s 3.5 percent, Indonesia’s 3.4 percent, and Thailand’s 1.6 percent.

By 2022, the Philippine economy is seen growing to 7.1 percent and further picking up by 8.2 percent in 2023. However, it will slow down to seven percent by 2024.