A number of economists lost no time upgrading their economic growth outlook on the Philippines for this year, and even for next year, after the country performed way better than expected in the third quarter despite the reimposition of tougher lockdown protocols at some point.

The 7.1 percent year-on-year gross domestic product (GDP) growth in the third quarter was a welcome surprise as market consensus was expecting a growth of only 4.9 percent.

Goldman Sachs Economics Research raised its full-year projection to 4.9 percent, within the government’s 4-5 percent growth target, from 3 percent previously.

Goldman Sachs shared Socioeconomic Planning Secretary Karl Kendrick Chua’s optimism of hitting this year’s 4- to 5-percent growth goal “as COVID-19 cases decline, vaccinations pick up and as the economy gradually reopens.”

Pantheon Macroeconomics also upgraded its forecast to an above-target 5.5-percent growth this year from 4 percent previously. But the UK-based think tank’s senior Asia economist Miguel Chanco said the strong third-quarter outturn was “far from sustainable.”

“The bad news is that the sturdy bounce-back in private consumption in the third quarter will likely come at the expense of the speed of a longer-term recovery … We continue to believe that the rebuilding of rainy-day funds, back to the pre-COVID-19 situation wherein 37 percent of households had savings, will continue to weigh on spending decisions in the coming year,” Chanco said.

Ayala-led Bank of the Philippine Islands (BPI) revised its full-year GDP growth forecast to 5.1 percent and 7.3 percent for 2021 and 2022, respectively.

“The easing of restrictions will likely provide a significant boost to economic activity during the holidays. The vaccination of minors will have a substantial impact on household consumption since they are a big driver of spending especially in malls. Meanwhile, the availability of pills and treatments against COVID-19 may accelerate the recovery of consumer confidence,” it said.

Although another surge in COVID-19 cases is possible in the next 12 months, the economic impact will likely be less severe given the availability of vaccines and treatments, the BPI research said.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort also sees the full-year GDP growth at 5 percent or higher with the strict quarantine restrictions now replaced with localized, granular lockdown, allowing the resumption of economic activities even with capacity limitations.

London-based think tank Fitch Solutions likewise brought up its GDP forecast this year to 4.5 percent from 4.2 percent, although for next year, its forecast was lowered to 6.5 percent from 6.8 percent.

New York-based Global Source said: “With rapidly declining infection counts and more easing of mobility restrictions recently, we are expecting further improvements in activity in fourth quarter and we are therefore reverting to our original full-year forecast of 5.5 percent.”

Capital Economics Asia economist Alex Holmes said they also had a rosier 2021 growth forecast of 5.2 percent, up from 4.5 percent previously.

“The good news is that the economy is set for another strong [fourth] quarter,” Holmes said, adding that their mobility tracker was currently at its highest level since the onset of the pandemic.

“But the bad news is that the economy is still weak and is starting from a very low base,” he said.

DBS Group Research economist Chua Han Teng said the Singapore-based bank’s upgraded GDP forecast of 5 percent for this year from 4.2 percent meant “the Philippine economy is recovering gradually after enduring a bumpy 2020 and 2021, and will make further progress in 2022.”

“However, having endured the greatest economic hit from the pandemic in the Asean (Association of Southeast Asian Nations), scarring is likely to be considerable and could hinder the recovery’s momentum and medium-term growth potential. Based on our projected growth trajectory, real GDP would return to 2019 levels in the second half of 2022,” Chua said.

Oxford Economics assistant economist Makoto Tsuchiya said the UK-based think tank would likely jack up its 3.4-percent growth projection for the Philippines for 2021.

“We expect the recovery to continue in the fourth quarter and become more broad-based in 2022 as easing restrictions will boost confidence and activity … Low vaccination rate as well as prolonged global supply disruptions are downside risks to our outlook,” Tsuchiya added.

Moody’s Analytics associate economist Sonia Zhu and economist Denise Cheok said they would also consider a “small” upward revision to their 4-percent GDP growth forecast for 2021.

Singapore-based United Overseas Bank said the third-quarter performance indicated “nascent recovery,” such that economists Julia Goh and Loke Siew Ting kept their “cautiously optimistic” 5.5-percent 2021 growth forecast for the Philippines.

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