THE Philippine economy is projected to decline quarter on quarter in the three months to June after business activity in Metro Manila and nearby provinces returning to near-standstill conditions for more than a month, macroeconomic research house GlobalSource Partners said.
“Given the 1.5-month lockdown, we expect to see Q2 output decline sequentially from Q1,” Romeo L. Bernardo, GlobalSource country analyst for the Philippines, said in a note dated April 29.
The second strictest form of lockdown was enforced in Metro Manila, Bulacan, Cavite and Laguna, and then extended for another two weeks until May 14 to ease pressure on the healthcare system. The government started reimposing lockdowns in the region in late March following a surge in coronavirus cases.
Even if it resulted in dampened business activity, Mr. Bernardo said the cautious approach to pandemic management was “positive” if it prevented more widespread transmission of new COVID-19 variants.
“The smarter way in which the current lockdown is being carried out, with fewer mobility restrictions and with businesses and the public learning to adapt, implies that the cost will be less than last year’s strict lockdown,” he added.
Last year at the height of the initial lockdowns, the economy ended up contracting 16.9% year on year in the second quarter.
The Philippine Statistics Authority will report first quarter gross domestic product (GDP) data on May 11.
In 2021, Mr. Bernardo said GDP is unlikely to grow beyond 5%, which is well below the government’s growth target of 6.5-7.5%.
Economic managers are set to meet this month to revise their growth projections, but the National Economic and Development Authority has said the initial GDP target will likely be downgraded because of the impact of the lockdown.
Despite a slower recovery this year, Mr. Bernardo said his firm has “become more optimistic about 2022 prospects given a more promising vaccination outlook.”
He said they expect to have 50 million people vaccinated this year or in the first quarter of 2022, slightly faster than their initial expectations that this can only be achieved towards the end of next year. He said the help of the private sector will give the much-needed boost to the program.
“The critical assumption of course is that the vaccines will arrive as scheduled or at least that delays will not be overly long. The uncertainty at this time comes from the vaccine export ban by India, the diversion of orders to India, Brazil and other hot spots, possible need for an early booster jab for countries that are advanced in their vaccination program. Adding to this, the US export ban has restricted supplies needed for vaccine production in India, home to the world’s largest vaccine manufacturing plant,” he added.
Mr. Bernardo said GlobalSource also expects the government to stop relying on its complex priority system for vaccine recipients to allow more inoculations.
The government aims to inoculate 70 million adults by year’s end. — Beatrice M. Laforga