Sun Life revises PH GDP forecast down to 5.5%

Sun Life Asset Management Co., Inc. anticipates an extended U-shaped economic recovery for the Philippines, with output returning to pre-pandemic levels in approximately two years due to subdued household spending and the ongoing COVID-19 pandemic.

The firm has revised its 2021 GDP growth forecast downwards to 5.5% from a previous estimate of 8.6%, acknowledging a slower recovery across all economic sectors.

Michael Gerard D. Enriquez, chief investment officer at Sun Life Asset Management, stated that the economy will likely require two years to regain its trendline growth.

The local economy contracted by 4.2% in the first quarter of 2021, which was worse than the consensus estimate of -3.2% and Sun Life's own projection of -2.0%.

Enriquez attributed the worse-than-expected GDP performance to the continued contraction in household spending at -4.8% and a -18% fall in private investments.

He noted that confidence in personal spending, mobility, and forward capital deployment is still hindered by fear of the pandemic.

Sun Life Asset Management now views 2021 as a recovery year, but anticipates it will not be as strong as initially predicted due to uncertainties surrounding fiscal stimulus and prolonged delays in vaccine rollout.