Amid virus containment struggles
The Philippines will make a slower economic recovery this year as it continues to struggle to contain the coronavirus disease and encounter delays in its vaccine program, the research unit of Moody’s said.
Steven Cochrane, chief economist for Asia-Pacific at Moody’s Analytics, said in his latest APAC economic outlook titled “Much potential for 2021H2” that the gross domestic product (GDP) of the Philippines would grow by 6.3 percent this year and 7.2 percent next year.
This means that the Philippines would grow the second fastest among the members of the Association of Southeast Asian Nations (ASEAN) after Vietnam’s 7.5 percent, faster than Singapore’s 5.3 percent, Indonesia’s five percent, Malaysia’s four percent and Thailand’s 2.8 percent. It is also faster than Taiwan’s 5.8 percent.
For 2022, the Philippines would be the fastest growing economy in ASEAN as its GDP growth forecast is better than Vietnam’s and Indonesia’s six percent, Thailand’s 4.8 percent, Malaysia’s 4.3 percent and Singapore’s 3.6 percent. Taiwan’s growth is seen at 5.8 percent.
However, the GDP growth projection of Moody’s Analytics is lower than the 6.5 to 7.5 percent for 2021 and 8.5 to 10 percent for 2022 penned by Philippine economic managers via the Development Budget Coordination Committee.
The Philippines slipped into recession as the economy stalled when the government imposed the longest and strictest lockdowns in the world exactly a year ago. As a result, the country’s GDP shrank by a record 9.5 percent, ending more than two decades of growth.
Cochrane pointed out the Philippines, Thailand and Malaysia are still struggling either to contain COVID-19 or to get their economic drivers going while most of the region have already recovered.
“Containment of COVID-19 in the Philippines has been elusive. After gradually falling from August to February, the number of new cases is rising again, and some quarantine measures are still in place. And pork prices have risen, caused by African swine fever, and vegetable prices have increased, caused by lingering impacts of last year?s typhoons,” Cochrane said.
COVID-19 cases in the Philippines have been accelerating over the past few weeks after breaching the 600,000 level with deaths nearing 13,000.
Cochrane said the pace of vaccination also would begin to boost the APAC economy in the second half of this year. Since the beginning of March nearly the entire region has begun vaccination programs, but at varying speeds.
“Among the major APAC countries, only the Philippines and Thailand still appear to be lagging in their procurement of vaccines, although our forecast assumes that they will acquire the needed vaccines as the number of sources expands,” Cochrane said.
As a result, the economist pointed out herd immunity in the Philippines may not be achieved until 2023.
According to Moody’s Analytics, the Philippines would be the last country in the region to exceed its GDP growth in the fourth quarter of 2019. It is expected to return to pre-pandemic levels by the third quarter instead of the fourth quarter of 2022.
“Last, the Philippines has multiple factors working to slow its pace of recovery. It is coming out of a very deep hole, as it languished under quarantine orders for much of last year. It continues to struggle to contain COVID-19, its fiscal policy response was quite limited, it has not yet developed an effective delivery system for vaccinations across its archipelago and rising food prices limit the role of consumer spending to support the local economy,” Cochrane said.