The economy is projected to have grown by five to six percent in 2021, a report released by First Metro Investment Corp. and the University of Asia and the Pacific said.
According to the latest issue of the Market Call, this is seen to improve further this year due to heavy election spending.
“We remain sanguine over the growth prospects for Q4-2021, as more firms have re-opened, and consumers headed back to malls and restaurants. Moreover, we still think the year-on-year inflation rate for December will go below four percent as local petroleum product prices fell sharply, and food inflation should ease,” the report said.
“However, we caution against over-optimism on account of the job losses in construction and manufacturing industries, tepid employment gain in the services sector in October, as well as uninspiring exports expansion,” it added.
The report said while employment rose in October, other facets of the labor situation paint a more mixed picture.
“But we expect good prints for November and December, with increased economic activity, and Q1-2022 with national and local elections in sight,” the Market Call said.
“Especially in the New Millennium, rising food costs (esp. rice) and international crude oil prices constituted the most important factors driving local inflation. We do not see food prices continuing its upswing and crude oil prices have plunged and retained a rather sideways movement thereafter,” it also said.
The report said domestic inflation is expected to head southward, only affected by worldwide inflation, to average significantly lower than 4.4 percent for 2021.
“And so, we think that BSP (Bangko Sentral ng Pilipinas) will keep policy rates unchanged for the whole of next year, also in order to see an acceptable growth pace well in place,” it said. – Angela Celis
