PHL economy seen as region’s laggard on virus spike, slow vaccinations

PHILIPPINE STAR/ MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

THE Philippines’ economic recovery from the coronavirus pandemic will lag behind its Asia-Pacific neighbors, as coronavirus disease 2019 (COVID-19) infections continue to spike and vaccines remain in short supply, Moody’s Analytics said.

“The Philippines is the laggard of the entire region as a record-high number of new COVID-19 cases has led to a resumption of strict lockdowns in Metro Manila, and the country faces a severe shortage of vaccines,” Moody’s Analytics Chief APAC Economist Steven Cochrane said in a note on Monday.

The pessimistic outlook for the Philippines is in contrast to the improving outlook for the rest of the Asia-Pacific region, “as the global economy is on the cusp of an acceleration due to the global pace of vaccination and stimulative fiscal policy,” he added.

Mainland China, Taiwan, Vietnam and New Zealand are leading economic recovery in the region, while Singapore and Malaysia are seen to perform the best among Southeast Asian peers.

Mr. Cochrane noted the Philippines and India will likely see strong growth rates this year due in part to the very low base effects, after their economies contracted by a record 9.6% and 8%, respectively.

But with the recent surge in COVID-19 cases in the Philippines and India, Mr. Cochrane noted both countries are at “greatest risk” of underperforming this year.

The Health department reported 9,628 new COVID-19 cases on Monday, with active cases at 141,375. Metro Manila and nearby provinces remain under a modified enhanced community quarantine until April 30.

“The lack of control of the pandemic, the inability to acquire vaccines, and the relative distance from export supply chains all factor into the outlook for the Philippines to be among the weakest in the region,” Mr. Cochrane said.

Moody’s Analytics Senior APAC Economist Katrina Ell said in an e-mail to BusinessWorld that its 6.3% growth forecast for the Philippine economy this year remains unchanged.

“We’re sticking with our 6.3% forecast but downside risks are elevated given the spike in local infections combined with the delays in vaccination availability. Without these conditions improving soon, the Philippines’ recovery will miss expectations in 2021,” Ms. Ell said.

Economic managers are reviewing their 6.5-7.5% growth target this year, as they take into consideration the impact of the reimposition of strict lockdown measures.

HERD IMMUNITY BY 2023?
Moody’s Analytics said the speed of vaccination across the region is important in determining the pace of recovery.

“No other APAC country may achieve herd immunity until 2022. In some places, such as in the Philippines, but also perhaps in Japan, South Korea or even China, that milestone may not be achieved until 2023,” Mr. Cochrane said.

About 1.48 million vaccine doses have been given in the Philippines since its vaccination program started in March, presidential spokesperson Herminio “Harry” L. Roque, Jr. said at a briefing on Monday. The Philippine government has only used vaccines from AstraZeneca Plc. and Sinovac Biotech, Ltd., citing delays in the delivery of supplies from other drug makers.

The Philippines is now third in Southeast Asia in terms of vaccines given, after Indonesia (15.811 million) and Singapore (1.667 million), according to the National Vaccination Operations Center, which cited data from Bloomberg and foreign service posts.

Despite the challenges, Mr. Cochrane said the Philippines could still see some bright spots, particularly the business process outsourcing industry.

“The Philippines and Thailand are less dependent upon goods exports and, having seen little improvement in the pace of goods that they do export, will have to depend on the eventual opening of international travel and tourism and, in the case of the Philippines, service exports such as business processing and software services,” he said.

“The Philippines has a modest, roughly equal exposure to both export destinations and should see strengthened demand for its service exports,” he added.

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