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Business

Philippine output gap seen highest in Southeast Asia

Louise Maureen Simeon - The Philippine Star

MANILA, Philippines — The Philippines will continue to have the biggest output gap in Southeast Asia amid a still fragile recovery and continued risks due to the emergence of new coronavirus variants.

During the release of preliminary results of the COVID-19 Country Assessment Report for Southeast Asia, the Asian Development Bank (ADB) said output levels in the region last year and this year would remain below pre-COVID levels.

ADB senior economist James Villafuerte said Southeast Asia’s forecast output level would still be around 11 percent below pre-crisis baseline despite the gradual recovery across economies.

In the Philippines, the output gap is at 16.4 percent this year, slightly higher than the expected 16.1 percent in 2021.

This puts the Philippines as the country with the biggest output gap in the region. In 2021, the country had the second largest gap next to Myanmar’s 26.5 percent following the ASEAN neighbor’s political unrest.

“This is really being driven by the sharp output contraction in 2020. The Philippines, Cambodia, Malaysia and Thailand have the highest output gap relative to their output trend,” Villafuerte said in a webinar yesterday.

“With the continuing spread of the Omicron variant, there is a pressing concern that the expected economic recovery in 2022 will actually be stalled with the emergence of the new wave of COVID infections that we are seeing now,” he said.

Next to the Philippines, Cambodia is seen having a high output gap as well at 15 percent, followed by Laos at 14.1 percent and Thailand’s 11.4 percent.

In particular, ADB’s assessment on the Philippines focused on the labor market disruptions due to the pandemic.

While unemployment has already eased to its lowest level since the pandemic, Villafuerte said millions of workers are still jobless and working fewer hours and taking part time jobs.

“The impact has largely been very hard for the informal sector, women workers, young and prime age workers. This change in employment composition may be expected to persist in the medium and long term,” he said.

ADB Southeast Asia senior regional cooperation officer Dulce Zara, for her part, emphasized that the longer the laid-off workers in the new labor trends remain unemployed, the less likely they are to be employable given the lost skills.

COVID-19

SOUTHEAST ASIA

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