ASIA-PACIFIC economies will likely lead the global recovery in 2021, with the Philippines viewed as a laggard due to the outsized impact of the coronavirus on the economy, according to Moody’s Analytics.
In a note issued Thursday, Steven Cochrane, Chief Asia-Pacific Economist at Moody’s Analytics, said the Philippines and India will have the “deepest holes to climb out of” in the region due to the extent of the damage done to their economies.
“The daily number of cases in the Philippines has come down from its peak in mid-August but has remained stable at a still uncomfortable level over 1,000 per day. So renewed investment into the Philippines likely will be delayed until there is further control and quarantines are eliminated or at least minimized,” Mr. Cochrane said in an e-mail to BusinessWorld.
Earlier this month, Moody’s Analytics revised its growth outlook for the Philippines to 6.2% from 7.8% to reflect a slower recovery due to the smaller-than-expected fiscal response to the crisis. For 2020, it expects gross domestic product to contract by 8.2%.
Better control over the pandemic, a gradual easing of restrictions, and improving trade makes the region’s recovery prospects more attractive than elsewhere, Mr. Cochrane said. However, some economies may not perform up to the regional standard.
“While it is easy to illustrate the region’s ability to contain the pandemic, there are local clusters that illustrate remaining risk within the region,” he said.
Coronavirus disease 2019 (COVID-19) infections in the Philippines totaled 412,097 as of Wednesday, according to the Department of Health. The country has the second most number of cases in Southeast Asia following Indonesia with more than 478,000 cases.
By 2021, emerging markets in the region may benefit from more investment, assuming COVID-19 is better handled, and emerging markets in Eastern Europe, Latin America and Africa continue to struggle with the economic consequences of the pandemic, Mr. Cochrane said.
Foreign direct investment into the Philippines rose on a year-on-year basis for a fourth consecutive month in August. Inflows during that month came in at $637 million, up 46.9% from a year earlier, according to the central bank.
However, net inflows dropped 5.6% year on year to $4.432 billion in the eight months to August.
To support growth prospects in 2021, Mr. Cochrane said resuming the infrastructure program will be helpful and will also boost employment in the near-term as long as social distancing measures are put in place.
“Once new cases go from the thousands to perhaps only double digits, work quickly to arrange travel lanes for business travelers and tourists from the largest sources of visitors, such as China, where the pandemic is under control,” Mr. Cochrane said. — Luz Wendy T. Noble