The declining number of COVID-19 cases in the Philippines augurs well for economic recovery and the return of jobs lost amid last year’s pandemic-induced steep recession.
But three think tanks on Monday cautioned the government against letting down its guard against the virus, especially as the more contagious Delta variant forced renewed lockdowns which hurt neighboring economies.
“The outlook for the Philippines has improved. The country has seen a decline in daily new infections after breaking records in the region earlier this year. New cases fell from a peak of more than 11,000 daily to half that level now,”
Moody’s Analytics senior Asia-Pacific economist Katrina Ell and associate economist Dave Chia said in a report Monday.
To recall, a surge in infections last March led to the revert to the most stringent quarantine levels in Metro Manila and four surrounding provinces accounting for half of the economy up to mid-May.
“The Philippines’ retail activities are expected to gradually pick up in line with eased restrictions from mid-July,” Moody’s Analytics said.
But Moody’s Analytics said the Philippines “needs to step up its vaccination efforts, as the sluggish campaign leaves it vulnerable to fresh resurgences” like those currently happening in Indonesia and Malaysia.
As of Sunday night, 11.71 million COVID-19 vaccine doses had been administered in the Philippines, but only 2.87 million Filipinos were fully vaccinated with two jabs. The government targets to inoculate 70 million adults by yearend to achieve herd immunity and further reopen the economy.
Pantheon Macroeconomics senior Asia economist Miguel Chanco said in a separate report that the decline in unemployment rate to 7.7 percent in May from 8.7 percent last April during the reimposed lockdowns in National Capital Region (NCR) Plus “indicated that the job market generally has improved since the start of the year.”
But Chanco said “Filipino jobs remain scarce,” as “the rising number of people returning to the workforce has flattered the unemployment rate.”
“The number of jobless workers effectively hasn’t moved, fluctuating around four million since the fourth quarter [of 2020]. By contrast, the size of the labor force has jumped by 11 percent since the start of the year, with the participation rate more than surpassing the pre-COVID-19 level and now hovering at its highest rate since 2015,” Chanco said.
Also on Monday, Japan Center for Economic Research (JCER) said the Philippines and Thailand have recently “fared better” than Malaysia in terms of combating new infections.
“The Philippines seemed to be the most affected country at the beginning of April, with the daily new confirmed cases reaching a peak of about 100 per million — more than double India’s per capita figures at the same time. But with lockdown proving successful in containing the virus, the number declined gradually to 60 per million people,” JCER said.
Despite these recent gains in controlling COVID-19’s spread, JCER’s consensus survey conducted last month among economists covering Asean-5, China and India showed a less optimistic average 2021 growth forecast for the Philippines, which declined to 4.3 percent from 5.2 percent previously and remained below the government’s downscaled target range of 6-7 percent.
The economists projected second-quarter gross domestic product (GDP) to grow 7.4 percent year-on-year, down from their previous consensus of 8.4 percent, and lower than expectations of double-digit expansion coming from last year’s very low base when 75 percent of the economy stopped at the onset of the pandemic.
“The economy is seen bouncing back this year on gradually recovering domestic activity, also supported by a firming construction sector. Moreover, continued vaccination efforts globally should boost foreign demand and rekindle the external sector. That said, the significantly low domestic vaccination rate clouds the outlook,” JCER quoted BDO Unibank’s chief market strategist Jonathan Ravelas as saying.
Besides Ravelas, JCER also polled the following economists: Ateneo de Manila University’s Alvin Ang, De La Salle University’s Mitzie Conchada, ING’s Nicholas Mapa, Metrobank’s Pauline Revillas, Nomura’s Euben Paracuelles, and UnionBank’s Carlo Asuncion.