Q1 GDP drop smaller than initially reported


By Nadine Mae A. Bo

THE PHILIPPINE ECONOMY within the first quarter declined at a slower tempo than beforehand reported, the Philippine Statistics Authority (PSA) mentioned a day earlier than it broadcasts preliminary figures for the second quarter.

Gross home product (GDP) — the worth of all completed items and companies produced within the nation at a given interval — fell by 3.9% within the January-March interval, slower than the 4.2% drop initially reported on Might 11, the PSA mentioned on Monday.

The companies sector fell by 4.1% within the first quarter, slower than the initially reported decline of 4.4%.

The next subsectors in companies noticed increased progress or slower contractions within the revisions for the first quarter: skilled and enterprise companies (-4.4% from -6.5%); actual property and possession of dwellings (-11.7% from -13.2%); human well being and social work actions (13.2% from 11.7%); training (0.2% from -1%); wholesale and retail commerce (-3.4% from -3.9%); and knowledge and communication (6.5% from 6.3%).

In the meantime, sharper declines or slower progress have been famous within the following subsectors: lodging and meals service actions (-22.5% from -20.6%); financial and insurance coverage actions (4.3% from 5.2%); transportation and storage (-19.6% from -18.8%); and different companies (-38.7% from -38%).

The business sector’s efficiency was revised to a 4.4% contraction within the first quarter, from the preliminary 4.7% drop. Subsectors that noticed upward revisions have been mining and quarrying (1% from -1%) and building (-22.6% from -24.2%).

Electrical energy, steam and water and waste administration posted slower progress at 1.1% from 1.9% beforehand. Then again, manufacturing progress was roughly unchanged at 0.5%.

The decline within the agriculture, searching, forestry, and fishing sector was revised to 1.3% from 1.2% initially.

Among the many objects on the expenditure aspect, capital formation noticed the biggest revision with a 14.8% decline within the first quarter in contrast with the preliminary 18.3% throughout the identical interval.

Family spending posted a revised 4.7% fall from the beforehand reported 4.8% drop, whereas authorities spending remained regular with a 16.1% progress.

Commerce in items and companies figures have been additionally tweaked, with exports (-8.8% from -9%) and imports (-7% from -8.3%) contracting lower than initially reported.

“The revision to the first-quarter GDP is a welcome improvement and a reminder of how the financial restoration and virus mitigation go hand in hand,” mentioned ING N.V. Financial institution Manila Department Senior Economist Nicholas Antonio T. Mapa in an e-mail.

He added that the foremost contributors reminiscent of building and choose companies doubtless benefited from the looser mobility restrictions on the time when the nation was reporting comparatively low new circumstances of COVID-19.

In the meantime, Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort attributed the upward revision to quicker infrastructure spending and the accommodative financial coverage by the Bangko Sentral ng Pilipinas (BSP), which saved key rates of interest on the record-low 2%.

“The beginning of the vaccination versus COVID-19 within the nation since March might have additionally helped increase confidence by each companies and shoppers, thereby supporting financial restoration prospects for extra industries,” he mentioned in a separate e-mail.

The primary-quarter 2021 revision comes forward of Tuesday’s launch of the preliminary estimate for GDP efficiency within the second quarter.

A BusinessWorld ballot of 20 analysts yielded a GDP progress estimate of 10.6% for the second quarter, a turnaround from the annual contractions of three.9% and 17% posted within the first quarter of 2021 and the second quarter of 2020, respectively.

The federal government expects the financial system to develop by 6-7% this 12 months.

“We count on all sectors to contribute to progress save for the federal government expenditures on the expenditure accounts. [Based on industrial origin], each companies and business are set to put up double-digit positive aspects whereas agriculture [is expected to be] pulled again,” Mr. Mapa mentioned on his outlook for the second quarter.

Nevertheless, he famous that the double-digit progress throughout these sectors is pushed largely by base results and that quarter-on-quarter progress is prone to stay unfavourable given the reimposition of a lockdown in April, coupled with elevated unemployment and soured sentiment by the second quarter onwards.

“As such, the Philippines exited recession [in the second quarter] however will doubtless expertise a double-dip recession by the third quarter after quarter-on-quarter GDP falls unfavourable for at the least two quarters,” Mr. Mapa mentioned.

Mr. Ricafort, for his half, mentioned measures to additional reopen the financial system would have supported the rebound within the second quarter if it weren’t for the stricter restrictions imposed in late March to mid-April.

He cited elevated authorities spending, the implementation of a legislation that cuts company earnings tax and reforms the tax incentive system, and low rates of interest as financial drivers for the second quarter.

The Philippine financial system should increase within the third quarter as a result of base results, Mr. Ricafort mentioned, with the continued two-week enhanced group quarantine in Metro Manila and different areas weighing on progress.

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