ING Bank Manila on Monday cut its first quarter Philippine economic growth forecast to -3.6 percent from the earlier -3.4 percent due to the stricter quarantine measures recently imposed to prevent the spread of coronavirus disease 2019 (Covid-19).
“A spike in Covid-19 cases forced authorities to reinstate strict lockdowns in the Philippines’ capital region and surrounding provinces for a week. This development shaves off roughly 0.1 percentage point from our 1Q (first quarter) GDP (gross domestic product) forecast, clouding to recovery efforts,” said ING Bank senior economist Nicholas Mapa.
President Rodrigo Duterte earlier approved the Inter-Agency Task Force for the Management of Emerging Infectious Diseases’ (IATF-MEID) recommendation to place Metro Manila and the provinces of Cavite, Laguna, Bulacan and Rizal under enhanced community quarantine (ECQ) from March 29 to April 4, 2021.
Mapa said that if the government extends the ECQ for another week, this would have a negative impact on full-year GDP.
“I think if the ECQ is extended another week, this could have a negative impact on FY (full-year) GDP once again, negating the favorable base effects for the GDP dynamic. Given that the current version of lockdowns can be considered ‘ECQ lite,’ we can expect anywhere from 0.1 to 0.3 percentage points impact on overall GDP,” he said.
Mapa earlier forecast the country’s GDP to grow by 5.1 percent this year and 4.3 percent in 2022 from a record low of -9.5 percent last year.
His estimates fall below the government’s 6.5 to 7.5 percent projection for 2021 and the 8 to 10 percent forecast for 2022.
“The sector that will be bearing the brunt of the lockdowns will be the services sector with other services shutting down while restaurants are only allowed to operate for take-out orders,” said Mapa.
“Nonetheless, we can not discount the negative impact caused by the now more than 1-
year long lockdown that is definitely weighing down on the collective psyche of the Filipinos consumer,” he added.
Aside from ING, the World Bank and Moody’s Analytics also earlier expressed concern on the country’s growth prospects.
According to Moody’s, elevated inflation, a large output gap, a recent resurgence of Covid-19 infections, and limited vaccine availability are all reasons for concern.
The World Bank, for its part, downgraded its economic growth forecast to 5.5 percent from the earlier 5.9 percent, noting that the Philippines continues to struggle in containing the spread of the virus.