Delay seen in economic recovery from COVID-19
UK-based Oxford Economics expects global economic recovery to be slow such that gross domestic product (GDP) in most countries including the Philippines would likely still be lower next year compared to prepandemic levels.
“Previously we had assumed that some relaxation of social distancing measures would commence in early 2021 based on medical developments such as a vaccine for the disease. However, we now judge this to be an over-optimistic assumption. We have adjusted our assumptions based on a vaccine or other developments that would allow a substantive reduction in social distancing rules won’t take place until mid-2021. As such, we now expect a slower pace of recovery globally in the fourth quarter of 2020 and the first quarter of 2021 than previously,” Oxford Economics assistant economist Makoto Tsuchiya said in an email.
In a recent report, Oxford Economics said the Philippines and other economies such as Malaysia, Switzerland, United States, Hungary, Chile, Sweden, Germany, Brazil, Romania, India, Thailand, United Kingdom, Australia, the Eurozone, Russia, Colombia, Argentina, Japan, South Africa, France, Mexico, Italy and Spain would have 2021 GDP below 2019 levels.
Only a few countries—China, Taiwan, Indonesia, South Korea, Poland, Turkey and Canada—would likely see their GDP next year above the 2019 levels.
As a result of the COVID-19-induced recession during the first half, the Philippines’ GDP had been estimated to fall to P18.6-19.1 trillion in 2020 from P19.5 trillion last year as the economy was projected to contract by an average of 5.5 percent, 2021 budget documents showed.
Postpandemic, GDP would rise to P20.4-21 trillion in 2021 and P22.4-23.3 trillion in 2022 if the economy grew by 6.5-7.5 percent during the next two years.
Oxford Economics further downgraded earlier its 2020 GDP projection for the Philippines to a contraction of 8.2 percent due to weak consumer spending and project delays caused by restrictions under a prolonged quarantine.
In a note to clients, Tsuchiya said the projected faster GDP slide from the previous forecast of 6.9-percent drop “not only reflects a bigger-than-expected contraction in the first half, but also the trends in high frequency data that point toward a less buoyant recovery.”
GDP declined by an average of 9 percent during the first-half recession such that the government expects the economy to shrink by 4.5-6.6 percent this year.
“We see private consumption contracting this year on high unemployment, depressed remittances and pessimistic consumer sentiment. Private investment is also expected to plunge this year given the uncertainty and delays to projects while infrastructure investments are impeded by social distancing measures,” Tsuchiya said.
“On the positive side, government spending and net exports should support growth,” Tsuchiya added.
Oxford Economics projected the Philippines’ GDP to rebound with 10.3-percent growth in 2021.
In a separate report, Oxford Economics head of India and Southeast Asia economics Priyanka Kishore placed the Philippines at 11th place among 14 Asia-Pacific countries in its recovery scorecard, just behind cellar dwellers Hong Kong, Indonesia and India, whose respective economic rebound would likely lag behind in the region.
Across metrics covering economic and health vulnerability, lockdown stringency, macro policy response to the COVID-19 pandemic as well as success in containing the deadly coronavirus, the Philippines scored negative 0.12 as it mainly was among the worst in health indicators such as number of critical care beds and medical doctors per population.
New Zealand scored the highest in Oxford Economics’ recovery scorecard with 0.43; Taiwan, 0.32; Singapore, 0.19; South Korea, 0.18; Vietnam, 0.11; Japan, 0.07; Australia and Malaysia, both 0.05, and China, 0.02.
Besides the Philippines, four other countries also recorded negative scores: Thailand (minus 0.02); Hong Kong (minus 0.21); Indonesia (minus 0.26), and India (minus 0.67). —Ben O. de Vera