The Philippines is on its way to a stronger recovery as gross domestic product (GDP) is now seen to grow by 7.8 percent next year instead of the original projection of a 5.2 percent expansion, base on the unit of credit rating firm Moody.
As an economist I can say that Philippines is slowly digging itself out of a deep hole starting in the third quarter, on its way to a stronger rebound next year.
The Philippines however, may post a deeper GDP contraction of 9.2 percent instead of 4.5 percent this year.
The Philippines is digging itself out of a deep hole after declining quarter-to-quarter by over five percent in the first quarter and by 15 percent in the second quarter. With the easing up on movement restrictions in the third and fourth quarters, the economy will begin to improve as households accelerate consumption and manufacturers raise production.
We need also to expects a lower GDP contraction of 9.5 percent in the third quarter and a modest contraction of four percent in the fourth quarter.
However, the real GDP would not exceed its peak in the fourth quarter of 2020 until the second quarter of 2022.
This delay is caused by the depth of the downturn caused by the long and very strict community quarantine orders in much of the country, and due to the modest fiscal support that so far has been pledged by lawmakers to support the economy and rebuild. Global trade is improving as well and exports should contribute to growth before this year is out.
It does not expect that many of the infrastructure projects that were underway prior to the pandemic would resume and contribute to employment and economic output.
And as the rest of the global economy improves, remittances by overseas Filipinos will improve and help support the economy once again. A persistent drag on the economy will be the slow return of international travel and tourism, which will likely be that slowest component of the economy to recover.
The uncertainties remain in the Philippines and Indonesia as most of Asia Pacific has enjoyed an early bounce back because of relaxed restrictions.
The Philippines and India would see some of the strongest growth rates in the coming years, but this is in large part due to the deep downturns in 2020, which make for easier year-to-year comparisons.
Further, these forecasts are perhaps the most uncertain, since neither country has clearly shown that it has effectively controlled the virus, nor has either committed fiscal resources toward recovery to the degree seen elsewhere in the region.
Let's just hope for the best after this pandemic as we are all trying to bounce back from uncertainty.