Philippines turns corner in Q3 but recovery may be slow: economists

THE Philippines economy may have turned the corner in the third quarter, but growth momentum is likely to remain weak in the coming months, said economists, responding to official figures on Nov 10.

Gross domestic product (GDP) fell 11.5 per cent year on year in the third quarter, slowing from Q2's 16.9 per cent fall but underperforming economists' expectations of a 9.6 per cent fall.

On a seasonally-adjusted quarter on quarter basis, Q3 saw a rebound of 8 per cent growth after Q2's 14.9 per cent fall.

But the recovery may already have started to lose steam, said Oxford Economics Philippines economist Makoto Tsuchiya.

The recovery in domestic demand is likely to be subdued as overseas remittances stay weak and unemployment remains high, while export recovery will be hindered by Covid-19 resurgence in the United States and Europe, he added.

UOB economists Julia Goh and Loke Siew Ting said that continued restrictions on activity and uncertainty over Covid-19 vaccines will likely keep growth momentum weak into the rest of the year and Q1 2021.

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They now expect the economy to remain in contraction in Q4, with GDP falling 8.2 per cent year on year, compared to their previous estimate of 2 per cent growth.

This would mean a full-year growth of -9.5 per cent, compared with the previous estimate of -5.5 per cent.

But they maintain their 2021 full-year estimated at 7 per cent, partly aided by base effects.