Government is hopeful the Philippines’ economic numbers will return to pre-pandemic levels by the middle of next year and will crawl out of contraction this year.
Socio-Economic Planning Acting Secretary Karl Chua noted “encouraging” prospects for 2021 while Trade Secretary Ramon Lopez is optimistic of a rebound this year based on recently announced encouraging investments and export figures.
Presidential spokesman Harry Roque said the government expects the economy to get past the negative growth rate territory within the year and even grow higher than 6 percent by 2022.
Roque, in a briefing, said while the country registered a negative growth for 2020, the quarterly growth still registered an improvement of about 5 percent from 11.5 percent in the third quarter.
“We expect that the economy next year, if the opening up continues, to return to the positive level and not only that, the country might return to its consistent 6 percent per annum growth before the COVID-19 (new coronavirus disease 2019),” he said.
Roque said the economic managers project the country can grow beyond 6 percent in 2022 with a target for 2021 of between 6.5 percent and 7.5 percent and between 8 percent to 10 percent in 2022.
Lopez said exports managed to grow by 2 percent in September and 3 percent year-on-year in November while registered projects at the Board of Investments reached P1.02 trillion in 2020, the second-highest in the agency’s 53-year history.
Lopez also cited a report of the United Nations Conference for Trade and Development which said Philippine foreign direct investments last year grew 30 percent, bucking a downward trend globally.
Chua shared Roque’s observation that with the continuous calibrated reopening of businesses and mass transportation, and the relaxation of age group restrictions, “we will see more economic activity in the months ahead.”
“ This will lead to a strong recovery before the end of the year, when the government will have rolled out enough vaccines against COVID-19 for a majority of our people,” he said.
According to Chua, the Philippines will still achieve two important economic milestones as planned, which are achieving upper middle-income country (UMIC) status and reducing poverty by six million Filipinos.
“We will still achieve both. (The) poverty (reduction target), even slightly more advanced, we may achieve that earlier than 2022, despite the pandemic. And we will still be able to achieve right on target based on our original plan the UMIC status. All of these relative to our own performance, the targets we have set are actually on track,” he said.
Chua said further opening the economy in 2021 will require a “careful and calibrated approach” given risks from new virus strains.
“However, prolonging the status quo of community quarantine and risk aversion is not an option. In 2020, we saw significant hardships among the people who were deprived of jobs and income that led to more hunger, more poor people, higher prevalence of other sicknesses, far more deaths from non-COVID reasons, and lost opportunities,” he said.
Impact on markets
First Metro Investments Corp. (FMIC) sees a recovery of the economy this year, enough to push the Philippine Stock Exchange index (PSEi) to 8,100.
The Metrobank-affiliated investment bank said it expects government infrastructure spending to accelerate this year, resulting to improved job numbers, driving consumer spending.
It, however, expects unemployment figures to first “worsen” in the first quarter before improving in the latter part of the year.
Exports figures are expected to improve and the dollar bottoming out in the first quarter.
FMIC said it expects the Bangko Sentral ng Pilipinas (BSP) to cut policy rates by 25 basis points in the first quarter to help “bring the economy up against more negative GDP figures that may last until the first quarter.”
“Despite the expected volatility that the local equities market will face in 2021, we think that PSEi will end between 7,800 to 8,100,” FMIC said.
“The Philippines economy’s return to positive growth and a rebound of over-20 percent in corporate earnings for 2021 and 2022 should support the impetus,” it added.
The market currently however is fully valued, according to FMIC as its forward price to earnings (P/E) ratio is on its five-year average.
“That should keep investors focused on good selection and timing in light of lingering uncertainties, especially if results fall way short of expectations,” it said. (A. Celis, J. Montemayor, I. Isip and R. Castro)