PHL likely to be Asia’s economic laggard in 2022

By Luz Wendy T. Noble, Reporter

MOODY’S ANALYTICS said the Philippines is likely be the last country in Asia to regain its pre-pandemic economic growth level, which may be seen by the fourth quarter of 2022.

In a note released on Tuesday, Moody’s Analytics slashed its forecast for Philippine gross domestic product (GDP) to 6.4% in 2022, from 8.8% previously as it expects the number of coronavirus infections to remain high. This is below the government’s 7-9% GDP growth target range.

“The revision is due to the still elevated number of deaths due to coronavirus disease 2019 (COVID-19) that may still add stress to the public health system and thus require at least limited neighborhood/community quarantines,” Moody’s Analytics Chief Asia-Pacific Economist Steven Cochrane said in an e-mail.

The Philippines may only regain its pre-pandemic GDP level by the fourth quarter of 2022, he added.

“The Philippines could be the last country in Asia to achieve this benchmark,” Mr. Cochrane said.

The Health department reported 9,055 new COVID-19 cases on Tuesday, bringing the active caseload to 103,077.

Mr. Cochrane also noted the government has not given any additional fiscal policy support since November 2020.

The proposed Bayanihan to Arise as One Act (Bayanihan III), which allots up to P400 billion for stimulus measures to revive the economy, is still pending at the Senate. It was approved by the House of Representatives in June, but economic managers remain cool to the proposal.

With business and consumer confidence still in the doldrums, fiscal support will help boost recovery, Security Bank Corp. Chief Economist Robert Dan J. Roces said.

“Fiscal stimulus is deemed crucial especially in pandemic recovery mode, as it complements and sustains the existing monetary policy levers right when the economy is beginning to turn the corner,” Mr. Roces said in a Viber message.

Also, Mr. Cochrane said the government needs to put in place an integrated approach to handle the pandemic, which involves prioritizing vaccination, boosting hospital capacity, and improving COVID-19 testing and contact tracing.

“An integrated approach will allow the reopening of the domestic economy that will generate greater consumption and investment spending. And with a freer flow of goods around the country, inflation should ease,” he said.

Based on available data from the Johns Hopkins University, only 22.73% or 24.579 million of the Philippine population are fully vaccinated. This is among the lowest rates in Southeast Asia and is only better than Indonesia (19.46%) and Vietnam (10.87%).

“Another crucial factor is the acceleration of infrastructure spending that was started prior to the pandemic. And finally, while it may take some time, the opening of the Philippines to a greater volume of international business and leisure travel will support the hospitality and tourism industries,” Mr. Cochrane said.

Meanwhile, Moody’s Analytics has kept its Philippine GDP growth forecast for 2021 at 4%, which is the low end of the government’s 4-5% full-year target.

The country exited recession in the second quarter as GDP rose 11.8% year on year, but it declined 1.3% quarter on quarter.

The Delta wave is already subsiding in most of Southeast Asia, bringing a reprieve for the last quarter of the year, Moody’s Analytics said.

“The remaining months will depend upon rising domestic consumer demand and continued improvement in exports. Consumer demand should rise as quarantine restrictions are eased and become more targeted,” Mr. Cochrane said.