As economists predicted Manila’s GDP (Gross Domestic Product) to surge up to 10% in the second quartile of 2021, the record pace of 11.8% raises eyebrows as the Phillippines recovers from a recession caused by the pandemic. This represents the fastest expansion since the fourth quarter of 1988.
As the economy contracted 17% in 2020, the 11.8% growth surpassed the expectations of 11 analysts surveyed by Reuters. Meanwhile, total investment increased 75.5% as private investment doubled.
“The robust performance is driven by more than just base effects. It is the result of a better balance between addressing COVID-19 and the need to restore jobs and incomes of the people,” said Socioeconomic Planning Secretary Karl Chua.
The Q2 economic recovery is attributed to looser COVID-19 restrictions, which increased household spending – one of the most important economic factors for the growth.
However, worries surface following the April-June period, which witnessed a surge in COVID-19 cases. The Phillippines suffers the second most severe outbreaks in Southeast Asia, next to Vietnam and Indonesia.
“The economic recovery will likely face a similar setback in the third quarter as mobility restrictions returned in August with the country now facing a surge in COVID-19 infections due to the Delta variant,” said Nicholas Mapa, a senior economist at ING Groep NV Manila. He added, “We will likely need to rework out full-year GDP forecast for 2021.”