Philippine GDP grows 11.8% in Q2 2021
Written by: Dave Joseph Balatbat CWP®, CEPP®, RMP
The Philippine Statistics Authority reported today an 11.8% Gross Domestic Product growth for the second quarter of 2021. This is the only double-digit GDP growth rate recorded since World War II.
However, this is not a strong indicator of a full recovery returning to the pre-pandemic levels of 2019. Since we’re coming off from a very low base which was a historic contraction of -16.9% last year Q2 2020, it is expected that we will have a notable rally in terms of growth (+11.8%) for Q2 of this year, economists call this “the base effect”. A “base effect” means that we are seeing an impression of a significant market recovery this quarter since the latest GDP figure is being compared with a substantially low base figure last year.
Anything below 10% would disappoint the market, again, since we’re coming from a very low base last year. As we go into another major movement restriction this month and once base effects fade, we may not see similar figures anytime soon after this. Although on a positive note, compared to last year, at least a portion of the population is getting vaccinated which gives us hope looking into 2022.
Let’s see how investors would respond to this tomorrow. The PSEi closed today at 6,623.23, with a 0.14% decline.
What does a positive GDP mean to us you may ask? I am no economist, but as a Wealth Planner, Entrepreneur, Investor, and Consumer, I always try to find ways on understanding these figures and their implications. A positive GDP means that for Q2 of this year, goods and services produced within our country’s borders have grown substantially. This also means that for Q2, companies and small businesses were able to hire workers and afford to give compensation which enables consumers to somehow spend and drive the economy. This can also attract more outside investors to come in since opportunities may arise with better market activity. But then again, we may not see similar numbers anytime soon since we are still being hindered particularly by the health crisis.
Your Wealth Planner,
Dave
Sources: PSA, Market Edge, Rappler, Investagrams
