Philippine economy remains fragile

MANILA, Philippines — The Philippine economy remains fragile amid the still limited boost in consumer and business confidence as COVID cases continue to escalate, the Asian Development Bank (ADB) said.

In a webinar yesterday, ADB country director Kelly Bird said there remains a huge uncertainty in the economy especially with the still increasing COVID-19 cases.

“We expect that the economy for the first half of the year will remain fragile in terms of recovery, and this is because of uncertainty about how the pandemic unfolds globally and domestically,” Bird said.

“We are seeing a very unexpected surge of COVID-19 cases in the last couple of months. The community quarantine will delay the recovery and the economy will remain fragile,” he added.

Metro Manila, where most of economic activities are concentrated, and nearby provinces remain under strict quarantine and yet COVID-19 cases show no signs of abating.

The government, however, is optimistic that the ramping up of COVID-19 vaccination will improve prospects for recovery.

Bird emphasized that consumer spending, which is very much needed to fuel the economy, would increase modestly as unemployment remains high and several sectors have yet to fully reopen.

He also said private investment would likely remain stagnant for the rest of the year because of a lot of excess capacity.

“There may be long-lasting impact on the labor market. We might see unemployment elevated for a longer time or wage and salary employment may slow down,” Bird said.

On the upside, exports recovery and infrastructure spending would be the saving grace of the economy as infrastructure is a major job generator and has linkages across value chains.

Still, Bird argued that the rollout of COVID-19 vaccines is the key to the safe opening of the economy and boosting consumer and business confidence.

Finance Undersecretary Mark Dennis Joven, for his part, said vaccines would drastically increase by the second half of the year following the current difficulty in securing supplies.

“We see that vaccination will ramp up over the second half of the year. That, in turn will lead to better or more robust growth. It’s critical to have a successful rollout to have the economy move forward,” Joven said.

The Philippines has secured appropriate funding for COVID-19 vaccines, but the problem now lies on the scheduling, delivery and the supply itself. The country’s budget for the procurement is P82.5 billion.

Joven maintained that strict quarantine measures cannot continue for a long period of time. In fact, a month of lockdown coupled with ayuda or lockdown aid is costing the government some P80 billion.

This is already almost equivalent to the budget allocated for securing COVID-19 vaccines for the entire country.

“Between spending for vaccination or spending for a social amelioration program, it is clear which is the more effective option,” Joven said.

Vaccine expert panel head Dr. Nina Gloriani emphasized that vaccine nationalism remains an issue that hinders the Philippines and other developing countries from securing the needed supply.

“The government is trying its best to negotiate even through diplomatic means,” she said.