Return to pre-pandemic growth seen beyond Duterte gov't
MANILA, Philippines — Next year will be brighter for Asia Pacific economies, but the Philippines will be among the last nations to fully recoup last year’s gains lost from the health crisis, a process that would outlast the Duterte administration.
Joining India and Japan, the country is considered mired in the “deepest holes” of a pandemic-induced recession that will take “until the second half of 2022” to surmount, Moody’s Analytics, a think tank, said in a report released Thursday.
“India and the Philippines were the two hardest hit by the economic impacts of the pandemic and have the deepest holes to climb out of,” it said.
At the other side of the spectrum, China, Taiwan and Vietnam are projected to hit new growth peaks before 2020 ends, while Hong Kong is seen recovering as early as first quarter next year.
The disparity in outlook speaks volumes of the success or failure of countries to control the spread of coronavirus disease-2019 (COVID-19) even as Moody's seen Asia Pacific as a region leading global growth next year.
Risks of fresh lockdowns remain as daily virus cases continue to be “uncomfortably high” in Jakarta and Manila. Recent news of vaccine development offers short-term reprieve, until countries face the grueling task of bringing inoculation home.
Another key determinant of economic performance is budgetary support. While Malaysia, Singapore, Australia and Japan deployed “sizeable” fiscal stimulus to put their economies back on track, India, Philippines and Indonesia’s spending packages did not impress much.
“Within the region, the risks are largely related to continued suppression of the coronavirus until a vaccine is available and providing enough fiscal support in the near term,” Moody’s analytical unit said.
In an event on Thursday, Acting Socioeconomic Planning Secretary Karl Kendrick Chua stressed that the government’s COVID-19 response had do away with stringent lockdowns, which tended to hurt economic activity. “The more important one immediately that we need to work out is the policy shift from total risk avoidance to risk management,” Chua said.
A day before, Finance Secretary Carlos Dominguez III justified the fiscal response to the crisis, which Moody’s characterized as “modest” although other observers have called too small for the unprecedented damage.
“We are really facing a problem of people’s confidence in the system and no matter how matter how much fiscal response you have if people don’t have confidence in going out and spending, it’s not really going to work, is it?” the finance chief said in a separate briefing.
That said, Moody’s Analytics generally projected a better next year for Asia Pacific. China, where coronavirus emanated, is leading a rebound in retail, while trade hampered by lockdowns is “rising slowly” in the Philippines, Japan, Thailand, Indonesia and India.
On the flip side, a boost from tourism in tourism-dependent economies like Singapore would take time as the sector’s recovery from travel barriers has commenced “very slow.”
“Barring any large-scale return of COVID-19, investors will likely bolster APAC region’s emerging markets,” Moody’s said.
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