Economic growth seen at 7.4% this year

MANILA, Philippines — The Philippine economy is expected to grow by 7.4 percent this year as the start of COVID-19 vaccination this month is boosting business optimism despite another wave of infections in the country.

In its latest analysis, market intelligence firm IHS Markit predicted that gross domestic product (GDP) for 2021 would return to growth territory and expand by 7.4 percent, coming from a low base after it contracted by a record 9.5 percent last year under the stress of a prolonged lockdown and a series of natural calamities such as the Taal Volcano eruption and destructive typhoons.

The firm’s forecast falls at the upper end of the government’s target of 6.5 to 7.5 percent for the year.

IHS Markit economist Shreeya Patel said the Philippines would still be among the fastest growing economies in Asia.

“Firms will now await the further easing of restrictions which will bring a much-awaited return of tourist activity,” Patel said.

“In the meantime, the mass vaccination program will put the nation in good stead and help bring about a return to normality,” she said.

The government is targeting to inoculate around 60 percent of its population to achieve herd immunity.

Latest data showed that about 240,000 healthcare workers have been inoculated since vaccination of started early this month.

“Business optimism regarding output levels in the year ahead reached the strongest since last February. The brighter outlook often reflected the news of vaccination approvals and rollout plans,” Patel said.

“Firms also noted expectations of a return to normalcy and stronger demand from both domestic and international markets,” she said.

However, in another global outlook, London-based think tank the Economist Intelligence Unit (EIU) said developing countries like the Philippines face a long wait before achieving COVID herd immunity.

“For many developing countries in Asia, we are not expecting them to pass the 60 percent immunization mark in the next five years even though they will have support from the World Health Organization-led COVID-19 Vaccines Global Access Facility (COVAX),” the EIU said.

“These countries have limited healthcare personnel compared to their population,” it said.

As of now, all vaccines being used in the country are from donations. It already secured loans from multilateral lenders to purchase vaccines but these would likely arrive later this year.

The EIU is not expecting the immunization level of the Philippines to reach a scale significant enough to lift mobility restrictions until at least 2022.

“Even after widespread vaccination is achieved, we are expecting governments to keep in place some sort of restrictions on international travel like quarantine upon arrival or COVID-19 tests,” the EIU said.

“This is because no vaccine is completely effective and there will be varying timelines across different countries. Tourism activities in Asia will not return to pre-pandemic level until at least 2023,” it said.

Among the countries in Asia, the EIU said the first economies to have widespread vaccination would be Hong Kong and Singapore as they have relatively larger number of health care workers than their population size.

Taiwan, Macao, Australia, New Zealand and South Korea would likely follow suit and achieve herd immunity by the first half of the year.

Economic giants China and India, on the other hand, would have widespread vaccination only by the second half of 2022 due to their large population.