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Third-quarter slump slightly less than initially estimated

The government is scheduled to announce the preliminary estimates for fourth-quarter GDP today (Jan. 28). — PHILIPPINE STAR/MICHAEL VARCAS

By Beatrice M. Laforga, Reporter

THE Philippine economy shrank a little less than previously estimated in the third quarter, the Philippine Statistics Authority (PSA) said on Wednesday.

In a statement, the PSA said Philippine gross domestic product (GDP), which indicates the value of final goods and services produced within a country during a specific period, contracted by 11.4% in the third quarter. This was a tad better than the initial 11.5% GDP contraction reported in November.

The government is scheduled to announce the preliminary estimates for fourth-quarter GDP today.

The PSA said several subsectors posted slower declines based on the updated data, namely Real Estate and Ownership of Dwellings (-19.4% from -22.5%); Education (-17.8% from -21.4%); and Other Services (-49.9% from -53.4%).

The upward revisions have been partly tempered by the faster-than-expected decline in net primary income (NPI) received from countries abroad to -29% from the -28.2% previously reported.

Despite this, the 13% year-on-year decline for gross national income (GNI) was unchanged for the third quarter.

The nine-month GDP average also remained at -10%.

Several economists said the slight improvement in the third-quarter GDP will not affect their current projections.

“It won’t affect my projections just yet. Pero ’yung (but for the) agriculture output, that’s concerning. I won’t be surprised if GDP has contracted in double digits,” said Security Bank Chief Economist Robert Dan J. Roces, who projected a 9.5% decline for the fourth quarter and a 9.9% drop for the entire year.

Agriculture output declined by 1.2% last year after the fourth-quarter production fell by 3.8%, following the devastation caused by a string of typhoons. This marked the first time the agricultural output posted an annual decline since 2016, when it shrank by 1.5%.

Ruben Carlo O. Asuncion, the chief economist at the UnionBank of the Philippines, Inc., revised his GDP projection to -6.5% (from -5%) for the fourth quarter and -9.1% (from -8.6%) for the full year.

“Downside risks may have been overlooked from weaker-than-expected government expenditures and also a weaker-than-expected export performance for the year,” he said via e-mail.

The PSA said on Wednesday that the trade deficit widened to $2.18 billion in December from the $1.725-billion gap in November last year, bringing the full-year 2020 shortfall to $21.84 billion.

Economic managers projected that last year’s GDP may have dropped by 8.5-9.5%.

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