Economists forecast over 8% growth in Q2

Most economists expect the country’s economy to have expanded by over eight percent in the second quarter, supported by the reopening of the economy and election spending.

A STAR poll of eight economists showed six have a gross domestic product (GDP) growth forecast of over eight percent for the second quarter.

The government is set to report economic performance for the second quarter tomorrow (Aug.9).

Rizal Commercial Banking Corp. chief economist Michael Ricafort said he estimates the second quarter GDP growth at +8 percent, citing the further reopening of the economy toward greater normalcy, with the most relaxed Alert Level 1 in place in Metro Manila since March and over 80 percent of localities placed under the same alert level.

He said election spending is also seen to contribute to GDP growth in the second quarter.

“Increased government spending, especially on infrastructure, ahead of the elections would also add up to 2Q 2022 GDP growth data,” he said.

For Miguel Chanco, chief economist for emerging Asia at Pantheon Macroeconomics, the economy likely grew 8.1 percent in the second quarter.

The think tank, however, expects a mild 0.3 percent contraction in quarter-on-quarter terms.

“The biggest quarterly drags on the economy should come from government spending and trade, with the former suffering naturally from the pause button hit by the election. To be sure, private consumption likely lost momentum, too, in the face of the sudden turnaround and spike in inflation,” Chanco said.

De La Salle University economist Mitzie Irene Conchada said second-quarter GDP growth could be at 8.6 percent on higher consumer spending and election-related spending.

“Also, businesses in the industry, especially the manufacturing and services sectors, continued to expand due to relaxed health restrictions,” she said.

She said growth could be limited, however, by the high inflation and weakening peso.

ING Bank Manila senior economist Nicholas Mapa said his forecast for second quarter GDP growth is at 8.8 percent, with household spending boosted by election-related outlays and relaxed mobility restrictions as drivers.

For John Paolo Rivera, associate director at Dr. Andrew L. Tan Center for Tourism at the Asian Institute of Management, the economy likely expanded by nine percent in the second quarter due to the relatively open or mobile economy, close to how it was before the pandemic.

“The level of economic activity has become more vibrant despite inflation and currency depreciation. However, should economic constraints continue, growth might be impeded,” he said.

As for Makoto Tsuchiya, assistant economist at Oxford Economics, the economy likely grew 9.3 percent in the second quarter due to low base effects and the reopening of the economy.

“The reopening of borders has also boosted foreign tourist arrivals, but the level remains a fraction of the pre-pandemic level. Consumption likely remained the main contributor to overall growth, even though we suspect that high inflation dampened the momentum to some extent,” he said.

Meanwhile, two economists see the economy growing below eight percent in the second quarter.

Jaison Davis, associate project manager of research at GlobalData forecasts a 7.20 percent growth for the economy in the second quarter.