An HSBC Group unit on Wednesday further trimmed its Philippine economic growth estimate for 2020 as it projected gross domestic product (GDP) to reach the low end of the government’s growth target for this year.
In a virtual briefing, Cheuk Wan Fan, HSBC Private Banking and Wealth Management managing director and chief investment officer for Asia, said the banking giant expected domestic output to have contracted “by 9.7 percent in 2020,” as it was likely to “lag behind [its] Asian peers, particularly North Asian peers like China, which have been doing relatively well in containing the [coronavirus].”
The estimate is worse than the bank’s previous outlook of a 3.9-percent shrinkage and the government’s adjusted assumption of a 8.5- to 9.5-percent contraction.
It is also worse than Fitch Ratings’ -9.6 percent; S&P Global Ratings, Capital Economics and DBS’ -9.5 percent; the Atram Group’s 9.2 percent; Fitch Solutions and ANZ Research’s -9.1 percent; Sun Life Philippines’ -8.8 percent; the International Monetary Fund’s -8.3 percent; the Asian Development Bank’s -8.5 percent; the World Bank’s -8.1 percent; and Moody’s Investors Service’s -7 percent.
But it is better than the Bank of the Philippine Islands’ -11 percent, ING Bank Manila’s -10.8 percent, Rizal Commercial Banking Corp.’s -9.5 percent to -10 percent, Security Bank Corp.’s -9.9 percent, and Nomura’s -9.8 percent.
The Philippines remained in a recession after domestic output slid by 11.5 in the third quarter of 2020, a record 16.9 percent in the second and 0.7 percent in the first. This brought the contraction in GDP to 10 percent in the first nine months.
For this year, Fan said the country’s GDP could rebound by 6.5 percent, but this depended on the government’s strategy in containing the coronavirus.
This figure falls at the low end of the government’s official forecast range of 6.5 to 7.5 percent.
“So why we exercise caution in gauging for the recovery momentum? It is mainly hinged on the virus containment because recently, we continue to see the [number of] new cases in the Philippines [rising] above 2,000 daily,” Fan said.
According to her, containing Covid-19 might take more time to get fully under control in the country, thus the bank sees the government continuing to focus on recovery as a policy priority this year.
But HSBC, Fan said, doesn’t “anticipate a massive stimulus package guided by the government. Stimulus would likely lead to a 100percent increase in government spending.”