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Omicron could derail short-term Philippine growth

METRO MANILA is under Alert Level 3, a stricter form of lockdown, up to Jan. 15 to curb the spike in coronavirus cases. — PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Senior Reporter

A FASTER ROLLOUT of coronavirus disease 2019 (COVID-19) vaccines and public compliance with health protocols have become more urgent as the recent increase in infections threatens to slow down the Philippine economy in the first three months of 2022, analysts said.

The recent surge in cases due to the Omicron variant could impact economic growth in the first quarter, Ruben Carlo O. Asuncion, UnionBank of the Philippines, Inc. chief economist, said

“Although it may not resemble the previous lockdowns, it can be quite a drag,” he said in a Viber message last week.

The government in December raised its gross domestic product (GDP) projection for 2021 to 5.5% after the economy grew faster than expected in the third quarter, leading economic managers to anticipate eased lockdown measures by January.

The government expects the economy to expand by 7-9% this year.

However, Metro Manila was placed under Alert Level 3, a stricter form of lockdown, starting Monday up to Jan. 15 to curb the spike in COVID-19 cases. A council composed of Metro Manila mayors also agreed to enact measures to restrict the movement of unvaccinated people.

As of Monday, the daily COVID-19 tally reached 4,084, for a total active case count of 24,992.

Early studies suggest that the Omicron variant is more contagious but leads to fewer hospitalizations than the Delta variant. The Omicron-driven surge in cases overseas has led other countries to go into lockdown.

Asian Institute of Management economist John Paolo R. Rivera said the Omicron variant poses a threat to the global value chain, which could then cause inflationary pressures and supply constraints.

The deployment of overseas Filipino workers and recovery of the tourism industry could be hampered by the spread of the variant, he said.

“The Omicron can be contained with the protocols, vaccine, and science that we have,” Mr. Rivera said in a Viber message. “Surge will be driven by the irresponsibility and selfishness of individuals who breach protocols instituted to ensure everyone’s safety.”

He said ignoring health protocols could lead to an economic downturn that would affect the poor.

“If the cases surge, first-quarter economic activities might be compromised, derailing again economic recovery.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the recent increase in the country’s debt-to-GDP ratio to 63.1% signals limited government spending resources in case of more lockdowns.

A quicker vaccination rollout would help protect the population against the Omicron variant and keep new COVID-19 cases low to justify more measures to reopen the economy, he said in a Viber message.

“The country has defeated the more deadly Delta variant as manifested by the significant reduction in new COVID-19 local cases amid accelerated vaccination and stringent health protocols. This could be a good signal on the country’s preparedness versus the Omicron variant without letting the guards down.”

Fewer than 50 million Filipinos had been fully vaccinated against COVID-19 as of Jan. 2, which means the government missed its end-2021 target of 54 million Filipinos.