Bank of the Philippine Islands (BPI) led by bankero TG Limcaoco expects the country to pre-pandemic level in terms of economic growth in the second quarter of this year.
In its latest data alert, the 170-year old bank said that the economy has been able to sustain its recovery momentum with a faster gross domestic product (GDP) expansion of 8.3 percent in the first quarter of the year despite the headwinds both here and abroad.
The Ayala-led bank said that mobility has recovered further especially in February and March when the COVID-19 cases subsided, while the movement of people in public places was back to pre-pandemic level in most of the first quarter as people were more confident to go out given the increasing vaccination rate of the country.
Likewise, the election campaign season that started in February also contributed to the mobility gains.
“As a result, economic activity had a strong recovery during the quarter. If the current growth momentum is sustained, the economic output of the country will likely return to pre-pandemic level by 2Q 2022,” BPI added.
Looking ahead, the listed bank is expecting a faster economic recovery as long as long as no new COVID-19 variant emerges.
According to BPI, the experience in the past five months has shown that consumers are now more comfortable to engage in face-to-face economic transactions despite the continued presence of COVID.
The big bank expects a faster growth rate for investment spending given the rising demand from consumers, while businesses are likely invest more in the expansion of their capacity in order to meet the demand.
However, BPI noted that other headwinds like inflation, rising interest rates, and supply chain issues may prevent the economy from maximizing this recovery.
“So far, pent up demand has offset the impact of inflation, but a prolonged period of elevated prices may eventually hurt consumer confidence,” BPI said.
The bank expects a faster GDP growth of 7.3 percent this year from the revised 5.7 percent last year, but this may go down to six percent depending on the behavior of oil prices for the rest of the year.