The Philippines’ economic recovery will likely continue to lag behind its peers in the region due to the slow pace of its vaccination rollout, with herd immunity now expected to be attained by May 2022, analysts from Maybank Kim Eng said.  

In a note on Friday, Maybank analysts Chua Hak Bin, Lee Ju Ye, and Linda Liu said the Philippines and Thailand will likely achieve herd immunity by May 2022, even as governments of both countries are targeting to inoculate 70% of their population against the coronavirus disease 2019 (COVID-19) by end-2021. 

They noted Singapore has already achieved herd immunity this month based on the current pace of vaccination, with Malaysia expected to follow by October. 

Indonesia and Vietnam are expected to attain herd immunity by July 2022 and August 2022, respectively. 

“The popular narrative is that the quickening vaccine rollout will soon unlock growth for the laggards. Reopening the economy more permanently can materialize when the vaccination rate reaches herd immunity thresholds at about 70%, Maybank analysts said. 

As of Thursday, the Philippines has fully vaccinated 11.8% of its population based on the global tracker Our World in Data, following Singapore (71.3%) and Malaysia (36.3%). This was also better than Indonesia’s 10.8%, Thailand’s 7.9% and Vietnam’s 1.5% inoculation rate.   

“Growth may jump, particularly for domestic services, when the vaccination rate reaches herd immunity thresholds,” Maybank analysts said.  

However, they warned that delays in the arrival of vaccines and the emergence of more contagious variants could push back these timelines.  

“The recent renewed COVID spread linked to the Delta variant serves as a reminder that the emergence of any new infectious variants could mean that achieving herd immunity may be elusive,” they said.  

On Friday, the Health department reported 17,231 new COVID-19 infections, a record-high daily rise in cases. The number of active cases reached 123,251.  

DIVERGENT RECOVERY  

Maybank analysts said a “divergent” recovery in the Southeast Asian region will likely persist through 2022, citing a survey conducted during its Invest ASEAN event. 

“Survey respondents believed that the divergent and uneven economic recovery could last well into 2022. Investors are not convinced that the laggards will catch-up with the leaders and expect Singapore and Vietnam to continue outperforming in 2022. This is despite the laggards catching up on vaccination and with that the prospects of economic reopening,” Maybank analysts said, adding that the Philippines and Thailand were seen as the laggards in the region.  

Asked which economy would lead the ASEAN’s post-pandemic recovery, 63% of the respondents answered Singapore while only 1% of the respondents said the Philippines.   

The divergent recovery path of ASEAN economies are driven by “uneven vaccination rollout; stronger global recovery in manufacturing and exports relative to services dampened by lockdowns; and uneven fiscal support between rich and poor,” Maybank analysts said.   

Maybank forecasts the Philippine economy to grow by 5.5% this year, slightly faster than the downgraded government target of 4-5%.   

It also noted the Philippines is facing limited fiscal space with its debt stock ratio hitting 60% of the country’s gross domestic product (GDP) from just below 39% in 2019.  

“The uneven fiscal support and diminishing fiscal space for poorer ASEAN countries may accentuate the divergent recoveries. Singapore and, to a lesser extent, Thailand have launched more generous direct fiscal support programs given their stronger fiscal positions going into the pandemic. But the Philippines, Indonesia and Malaysia are facing large increases in public debt and waning fiscal space,” it said. — BML 

IMPORTED car sales slipped by 5% in July, as the lockdown restrictions continued to dampen consumer confidence amid the coronavirus pandemic.  

In a report released on Friday, the Association of Vehicle Importers and Distributors, Inc. (AVID) said vehicle sales of its 21 members stood at 4,862 units in July. This was 5% lower than the 5,101 units sold in the same month last year, and also 2% lower than the 4,961 units sold in June.  

Despite the contraction in July, the industry association reported a 43% increase in sales in the first seven months of the year, which it says “reflects the industry’s overall improvement amidst the pandemic.” 

Total sales reached 35,092 units compared to 24,610 units sold during the same period in 2020, as sales of light commercial vehicles (LCV) improved. 

“LCV sales surged by 52% in the first seven months of 2021 from 16,561 units in the first seven month of 2020 to 25,127 units sold in the same period this year,” AVID said. 

Ford Group Philippines, Inc. registered the most LCV sales with 10,343 units, followed by Suzuki Philippines, Inc. with 7,076 units, and Hyundai Asia Resources, Inc. (HARI) with 3,177 units. HARI is the local distributor of Hyundai vehicles.  

The commercial vehicles segment registered a record 448% growth in the first seven months of the year, mostly due to sales of Hyundai trucks and buses. 

“(Hyundai) is a huge contributor to nationwide efforts at modernizing public utility vehicles. The Korean brand now totals YTD sales of 852 units, which is a significant improvement from the 156 units sold in the same period a year ago,” AVID said.  

Passenger car sales, on the other hand, went up 15% to 9,110 units in the January to July period. 

However, July sales of passenger cars fell 27% year-on-year to 1,293. This was also 5% lower than June’s 1,358.  

AVID president President Ma. Fe Perez-Agudo said that the local automotive industry has gradually adapted to “new normal” operations. 

“These lessons fuel our passion for developing new and innovative ways to addressing the needs of the market. And AVID is determined to pave the way towards recovery,” she said in a statement. 

AVID’s 21 members distribute 26 global auto brands in the Philippines. — AYY  

The average power spot market price fell by 23% to P5.03 per kilowatt-hour (/kWh) this month, from July’s level of P6.52/kWh, on the back of better supply and lower demand, the Independent Electricity Market Operator of the Philippines (IEMOP) said on Friday. 

“Average market price this month decreased to P5.03/kWh which is somehow attributable to increase in supply,” IEMOP Manager for Pricing Validation and Analysis John Paul Grayda said in a virtual media briefing on Friday. 

Citing recent data, he said that supply levels in the wholesale electricity spot market (WESM) in Luzon and Visayas reached 13,711 megawatts (MW), higher by 800 MW compared to last month’s 12,911 MW. Meanwhile, demand levels in the spot market in the two islands hit 10,174 MW, lower by 39 MW from July’s 10,213 MW. 

Data for the August billing covered August 1 to August 18. 

The market operator also gave updates on the central scheduling scheme currently taking place in Mindanao, which doesn’t have a power spot market yet.  

“To date, we are still assessing with the DoE (Department of Energy) on (whether) we need to extend the WESM central scheduling before we fully commercially operate (the) WESM in Mindanao,” IEMOP Manager of Operations Planning and Modeling Edward I. Olmedo said during the briefing. 

Central scheduling in Mindanao began on June 29 and is slated to end on August 25. 

Leonido J. Pulido III, who leads the WESM’s governance body Philippine Electricity Market Corp., earlier said that central scheduling refers to the “scheduling of contracted generating capacities to meet the energy demand of consumers, and is dispatched by the system operator who follows WESM-generated schedules.” 

“However, the resulting energy prices will not be binding as the settlement of transactions will still be based on the contract prices in the power supply agreements,” he said. 

Last month, the DoE ordered the Mindanao power industry to continue with the central scheduling scheme until it announces the date of commercial operations of the region’s spot market. 

In an advisory dated July 24, Energy Secretary Alfonso G. Cusi told Mindanao-based participants to complete their WESM registration within the central scheduling period, as those who do not fulfill this requirement will face sanctions.