ING Bank Manila senior economist Nicholas Mapa
MANILA – Consumer loans are projected to lead the recovery of various sectors this year but their return to pre-pandemic levels, including those of domestic growth and the jobs markets, are seen only by next year.
In a virtual briefing Monday, ING Bank Manila senior economist Nicholas Mapa said the banks’ lending to consumers is the “sector that bears watching” since although this remains weak, it is expected to recoup from pandemic-related impact ahead of the others as the economy continues to reopen and the job market improves.
“With consumer loans in free fall, I think, we’re going to see this sector bounce back before we see the rest of the other sectors sort of recover,” he said.
Mapa said recovery hinges on returning to the economy’s pre-pandemic performance wherein household spending played as the base of the expansion, followed by investment and government spending.
“Until we see that restored, I think it’s going to be rough sailing for most of the sectors,” he said.
Since the job market remains challenging this year, Mapa said consumer loans are seen to again post double-digit growth “maybe closer to end 2020 when (the) job market hopefully stabilizes.”
“Maybe end-2022 or maybe mid-2022 before we see a reversal and that’s not base effect-driven,” he said.
Preliminary Bangko Sentral ng Pilipinas (BSP) data show that lending activities of universal and commercial banks (U/KBs), excluding their placements with the central bank’s overnight reverse repurchase (RRP) facility, slipped by 0.7 percent last December after expanding by 0.5 percent in the previous month.
With consumer confidence still affected by the pandemic, Mapa said the economy’s first-quarter output, as measured by gross domestic product (GDP), is expected to remain in contraction but at a lower rate of -3.4 percent compared to the -8.3 percent in the last quarter of 2020.
Domestic expansion for the second to last quarters of this year is projected to be at 13 percent, 5.9 percent, and 5 percent, respectively.
Mapa forecasts full-year growth to be around 5.1 percent, boosted by the continued easing of movement restrictions, which is seen to boost economic activities.
Since growth remains fragile, he sees BSP’s policy-making Monetary Board (MB) keeping key rates steady this year despite the elevated inflation rate, which he expects to exceed the government’s 2-4 percent target band in the first half this year.
Mapa forecasts first-quarter inflation rate to average at 4.2 percent, 4.3 percent in the second quarter, 3.9 percent in the third quarter, and 3.8 percent in the fourth quarter. (PNA)
