DTI chief: Economic growth to start in Q2 if no surge in Delta variant

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Metro Manila (CNN Philippines, July 16) — The head of the Department of Trade and Industry says the economy will be picking up beginning in the second quarter of the year if the Philippines can avoid another surge in COVID-19 cases that may be triggered by the highly transmissible Delta variant.

“We expect the positive growth to take place and to start this second quarter and into the third and fourth quarter,” Trade Secretary Ramon Lopez told CNN Philippines’ The Exchange on Friday.

The Cabinet official cited the milder economic decline of 4.2% observed for the period January to March, compared to the 8.3% slump in the fourth quarter of 2020. 

Lopez cited among the improvements in economic indicators since then are in foreign direct investments — specifically a three-digit growth in April — and the country’s manufacturing activity which returned to expansionary territory this June after two months of decline.

However, Lopez emphasized it is “very critical” that the country prevents another surge in COVID-19 infections, particularly one caused by the Delta variant which ravaged India and more recently Indonesia, for the economy to bounce back.

“This threat of the Delta variant, hindi sana mangyari dito sa Pilipinas to the extent ng mga nangyari sa mga katabing bansa natin,” he said. “Importante po ‘yun [That’s important] so that the kind of recovery we’re seeing now will continue ‘til the end of the year and into the following years.”

[Tarnslation: This threat of the Delta variant, hopefully it won’t happen in the Philippines to the extent that happened to our neighboring countries.]

Earlier this year, main economic hub Metro Manila and nearby provinces reverted to strict lockdowns as authorities moved to quash the spike in cases said to be driven by new coronavirus variants. 

However, ING Bank senior economist Nicholas Mapa said the economy might keep on struggling for the rest of the year — with a return to pre-pandemic growth levels only possible by end-2022.

“The double-digit growth that he’s expecting in the second quarter, if you think about it, it comes on the back of last year’s -16.9% GDP,” he said about Finance Secretary Carlos Dominguez’s statement earlier this week. “That’s the mirror image of that really bad performance we had last year.”

Dominguez said on Monday the expected recovery this quarter is being driven by a faster vaccine rollout and implementation of economic recovery measures.

The economic team targets a growth of 6-7% for the Philippine economy this year.