THE Philippine economy performed better than earlier assumed in the first quarter of the year, according to the Philippine Statistics Authority’s (PSA) recent revision of the country’s gross domestic product (GDP) rate during the period.
In a statement on Monday, the PSA said the country’s GDP actually contracted by 3.9 percent in the first three months of the year, an upward revision from the 4.2-percent contraction based on their earlier estimate.
The PSA said major contributors to the revision were Professional and business services, which improved from -6.5 percent to -4.4 percent after the revision. Construction was also revised from -24.2 percent to -22.6 percent; and Real estate and ownership of dwellings, from -13.2 percent to -11.7 percent.
Net Primary Income (NPI) from the Rest of the World and Gross National Income (GNI) also both recorded upward revisions from -75.8 percent to -75.6 percent and -10.9 percent to -10.6 percent, respectively.
The PSA revises the GDP estimates based on an approved revision policy which is consistent with international standard practices on national accounts revisions.
The PSA is set to release the country’s second quarter GDP figures on Tuesday.
Earlier this month, international think tank Oxford Economics said the local economy will experience the so-called pandemic scarring that is expected to lower the country’s long-term growth.
Oxford Economics economist Sian Fenner said they estimate “the long-run nominal neutral policy rate” of the Philippines to hit 5 percent, slashing their earlier forecast of 5.5 percent.
Oxford Economics defines long-run nominal neutral policy rate as the rate at which the economy is in equilibrium and monetary policy fully normalized.
“The pandemic will have a lasting negative impact on Asia-Pacific [APAC] economies, and we forecast the Philippines to experience one of the largest permanent losses in output, with GDP levels in 2025 likely to be 8.4 percent lower than our pre-pandemic projections—the equivalent of 1.75 trend years of lost growth,” Fenner said.
Fenner blamed the mismanaged number of cases in the country and the fiscal response of the government, which led to their lower long-term growth forecast of the country.
Image courtesy of Nonie Reyes