Strong PH recovery to start in 4th quarter

Unable to contain COVID-19 and given the slow mass vaccination, the Philippines’ economic recovery is expected to drag and only see a semblance of the strong prepandemic growth pace toward year’s end, Moody’s Analytics said on Tuesday.

In the Philippines, “we see the pace of recovery rather slow through the third quarter and finally picking up some speed in the fourth quarter,” Moody’s Analytics chief Asia-Pacific economist Steven Cochrane said in an email even as the region as a whole is expected to lead global economic rebound by the second half of 2021.

“By the fourth quarter, we should see the beginnings of economic acceleration as vaccinations finally begin to make a difference in immunity and the ability of quarantines to finally be eased up,” Cochrane said.

In a report, Moody’s Analytics projected the Philippines’ gross domestic product (GDP) growing by 6.3 percent this year, among the fastest in the region after India, China, Vietnam and New Zealand. But the forecast is below the government’s 6.5 to 7.5 percent target range for 2021.

The Philippines and India would mainly benefit from a low 2020 GDP base as they emerge from their deep recessions.

“The Philippines faces challenges on many fronts,” Cochrane said, of which topmost was the ability to roll out the vaccine sufficiently quickly across the country.

However, “the Philippines started late and is moving slowly in its vaccination program,” Cochrane said.

Good balance

Moody’s Analytics said the Philippines and Thailand were lagging behind in the region in terms of vaccine procurement, “although our forecast assumes that they will acquire the needed vaccines as the number of sources expands.”

“We cannot be sure that the spread of COVID-19 can be curtailed until vaccinations are more widely available because the quarantines in Metro Manila have not been completely effective. The recent curbs on movement confirm this,” Cochrane said, referring to the two-week curfew since Monday on top of localized lockdowns in communities with high COVID-19 cases.

Acting Socioeconomic Planning Secretary Karl Kendrick Chua told the Inquirer on Monday that the recent localized restrictions were “a good balance to ensure affected areas are quarantined and the rest allowed to work.”

Given their bigger populations scattered across archipelago, the Philippines and Indonesia would be the last in the region to achieve herd immunity from COVID-19—seen in 2023, while the rest of the region would do so next year.

Cochrane also pointed to risks coming from the lack of additional financial support to businesses as well as elevated consumer prices.

“The lack of aggressive fiscal policy support means that a rebound in employment and small business operations from the long quarantines will be slow,” Cochrane said.

— Ben O. de Vera