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Citing the “disappointing” first quarter drop, Sun Life PH has cut its gross domestic product (GDP) growth projection for the Philippines this year.
This is according to Mike Enriquez, Sun Life chief investments officer who recently presented his market outlook for the second half of year 2021.
“Based on latest GDP forecasts, we are now expecting a 3.9 to 7.1 percent, with a midpoint of 5.5 percent growth,” he said. The adjusted outlook is lower than the government’s revised growth assumption of 6 to 7 percent, but it is an improvement over the Philippines’ 9.6-percent decline last year.
The life insurance firm report pointed out that the GDP for 1Q21 remains a disappointment as it contracted higher than expected. Households continued to contract, while private investments fell, suggesting that “the confidence in the economy on personal spending, mobility and forward capital deployment is still at the clutches of fear towards the pandemic.”
Sun Life expects the economy to take 2 years to return to trendline growth, hence an extended U-shaped type of recovery for GDP.
The company firmly believes the 2021 will be a recovery year. However, it will not be as strong as forecasted earlier due to extended delays in vaccine supply deployment and the uncertainty of fiscal stimulus. The economy will take a little longer to fully recover.
The economy is expected to increase 10 to 15 percent in the second quarter, 6.5 to 10 percent in the third quarter, and 3 to 7 percent in the fourth quarter, according to a Sun Life simulation.
Finally, the recovery is expected to be led by Telco, Property, Consumer and Transport sectors.
