GDP grew 5.6 percent in the fourth quarter of last year compared to third-quarter output, although slower than the 8-percent quarter-on-quarter growth during the July-to-September 2020 period.
“The opening really happened more in November last year and we also lowered the age group [allowed outside their homes] in the MGCQ area,” said Acting Socioeconomic Planning Secretary Karl Kendrick Chua, who heads the state planning agency National Economic and Development Authority (Neda).As such, Chua said placing the entire Philippines under MGCQ in March would allow an even faster quarter-on-quarter recovery.
The government targets GDP growth of 6.5-7.5 percent in 2021 following a 9.5-percent drop in 2020—the Philippines’ worst postwar recession.
Chua also agreed with an Oxford Economics report, which said countries that had been through the strictest lockdowns stand to benefit more from reopening their economies than those that did not impose drastic containment measures.
Consumer spending in the Philippines is likely to rebound this year when lockdown restrictions are gradually lifted and the coronavirus disease 2019 (COVID-19) vaccine rollout is implemented, Fitch Solutions Country Risk and Industry Research said.
“The tighter lockdown restrictions are today, the greater the scope for a major relaxation of restrictions,” Oxford Economics director of global macro research Ben May noted in a Feb. 15 report tiled “Coronavirus Watch: The winners from ending lockdowns.”
The UK-based Oxford Economics said progress in vaccination, prevalence of the disease, presence of more transmissible COVID-19 variants as well as health system capacity still remained major considerations in determining the speed of relaxing quarantine restrictions.
“This better outlook comes from expectations that there will be more jobs and better incomes, less quarantine restrictions and more businesses reopening,” Fitch Solutions said in a note on Tuesday.
Private consumption, which makes up 70% of the economy, slumped by 7.2% in the fourth quarter of 2020, as consumers remain cautious amid a steady rise in COVID-19 infections.
“If the government is able to effectively inoculate its population over 2021, while at the same time gradually lifting restrictions, we believe consumer confidence will rapidly return to optimism,” Fitch Solutions said.
This year, Fitch Solutions expects household spending to grow by 5.7%, mainly on the low base effect.
“Food and nonalcoholic drink spending was prioritized in household budgets in 2020, and so growth in spending on these items, while remaining positive, will be slightly lower than in 2021,” Fitch Solutions said, noting that it expects the segment to grow by 5.3% after a 9.3% drop in 2020.
On the other hand, growth in other consumer categories such as clothing and footwear spending (8.9%); alcoholic drinks and tobacco spending (10.4%); furnishing and home spending (12.7%); recreation and culture spending (7.3%); and restaurants and hotels spending (10.6%) are seen to grow faster after coming from a low base last year.
The Department of Tourism also welcomed the Inter-Agency Task Force on Management of Emerging Infectious Diseases’ decision to approve the uniform travel protocols for all local government units. This will improve regional travels and may soon regain confidence of foreign tourists / investors.
More national agencies and economic advisers are recommending opening the borders provided that we continuously manage the tracing and implement the vaccination program. Aside from acquiring the vaccines, it’s also an important task to boost the confidence of citizens in vaccination and to fight fake news.
Former Secretary of Health, House senior deputy minority leader and Iloilo 1st District Rep. Janette Garin said health leaders and experts should be “speaking the truth at all times, not selective, fearful or engaged in politicking” in addressing vaccine hesitancy.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno is looking at the fast growth of digital economy and on how COVID 19 speeds up the adaptation of various businesses. The business growth and stimulus packages are already on the works and more confidence will begin once the mass roll-out of vaccination begins.
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