Philippines economic outlook worsens

MANILA, Philippines — A surge in COVID-19 cases, which has prompted the government to impose localized lockdowns anew to contain the spread of the virus, paints a dark picture of the future of the Philippine economy, according to a London-based think tank.

In its weekly brief, Capital Economics has downgraded its gross domestic product outlook for the Philippines to 9.5 percent from its previous estimate of 11 percent due to the worsening virus situation.

Inflation for the year is seen to likely settle at 3.8 percent, higher than the 2.6 percent recorded last year.

“This would leave the economy over 12 percent smaller than its pre-crisis trend by the end of the year – by far the biggest gap in the region,” said Gareth Leather, senior economist for Asia.

Over the past week, average new infections in the country increased at the highest pace since September 2020.

In fact, 5,000 new COVID-19 cases were recorded on Saturday alone, bringing the total to 616,611 cases. Active cases now stand at 56,679.

“A growing proportion of positive test results suggest more cases are now going undetected,” Leather said.

The surge in COVID-19 cases also prompted Metro Manila mayors to re-impose curfew hours and granular lockdowns. The capital accounts for nearly 40 percent of the country’s GDP.

This means that any move to tighten restrictions again will significantly affect the country’s move toward economic recovery.

Capital Economics said recent economic data have been disappointing.

“Export growth fell back further into negative territory in January. Labor market data also show that the unemployment rate remained stuck at 8.7 percent at the start of 2021,” Leather said.

The country’s export sales slid 5.2 percent in January to $5.49 billion due to renewed restrictions in most developed markets amid the new COVID-19 variants that are more transmissible.

Employment in the country also continues to be bleak as four million Filipinos remain jobless in January, still reflecting the relatively slower pace of economic recovery.

Last year, the economy contracted by a record 9.5 percent, buckling under the stress of a prolonged pandemic lockdown as well as various natural calamities.