2Q GDP slips sequentially due to lockdown

PHILIPPINES - In Brief 10 Aug 2021 by Romeo Bernardo

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Government reported today that 2Q GDP shrank 1.3% on a seasonally-adjusted quarter-on-quarter (qoq) basis. The losses reflect tighter restrictions to activity that were imposed starting late March following an unexpected outbreak in covid-19 infections and were only gradually relaxed over May and June. (Table 1) Quarantine measures affected mainly the services sector which contracted 2.8% qoq per government estimates, mirroring the 2.4% decline in private consumption on the demand side. The relatively milder impact of 2Q’s smarter lockdown compared with last year may be seen in the continuing growth of the industrial sector, especially since construction works were allowed this year and public transport was available to ferry workers. 2Q’s GDP performance brought the headline year-on-year growth rate to 11.8%, a number that reflects large base effects (15% qoq contraction last year).CHART 1.Seasonally adjusted national accounts, qoq growthSource: PSATABLE 1.Community restrictions in Q2*with heightened restrictions**with some restrictionsConsidering the re-imposition of lockdown measures last week due to the spread of the Delta variant, the question in economic forecasters’ minds is whether 3Q GDP will improve or worsen further. The answer depends on how long current restrictions will be in place.So far, the signals of a quick economic re-opening are not good, although a decision to extend the enhanced community quarantine (ECQ) still depends on whether the infection curve can be flattened over the next two weeks. The health department yesterday said that given the rapid rise in infections over the past two weeks, the Philippines is now classified as “high-risk. ”Metro ...