As Asia transitions to a “Goldilocks” phase of economic recovery in 2021, the Philippines is seen by global financial services giant Morgan Stanley among the countries that will benefit the most from the availability of COVID-19 vaccines.
Across the region, “this Goldilocks phase should see accelerating and above-trend year-on-year growth, rising but still benign inflation, and ‘big easy’ policies,” Morgan Stanley Research said in a Nov. 3 report titled “Goldilocks and the Three Bears.”
“In particular, we believe that India, Indonesia and the Philippines look better placed in this Goldilocks environment, as they stand to benefit more from early vaccine availability and the Fed’s AIT framework,” Morgan Stanley added, referring to the US Federal Reserve’s new average inflation targeting which started this year.
“Even though daily COVID-19 cases have also come off earlier highs in India, Indonesia and the Philippines, these economies are likely trailing their Asian counterparts when it comes to COVID-19 containment. We think they could benefit disproportionately from vaccine availability, which could come as soon as later this year and/or early next year,” Morgan Stanley said.
In the case of the Philippines, Morgan Stanley noted that the government had already been in discussions with a number of possible vaccine sources such as China, Russia and the World Health Organization, as well as giant US drug firms like Moderna Inc. and Pfizer Inc.
“The government is also planning to hold talks with Australian biotech firm CSL Ltd. and partner University of Queensland, as it looks to diversify possible vaccine sources. While policymakers acknowledged that the Philippines does not have its own vaccine manufacturing capacity, it has sought to join clinical trials for vaccines,” Morgan Stanley said.
Also, the Philippines, India and Indonesia enjoy relatively lower debt-to-gross domestic product ratios compared to their neighbors, making them better positioned for an economic rebound in the medium term.
“We still believe that those with better balance sheets, better demographic trends and institutional ability to push through structural reforms to offset headwinds from deglobalization are likely to fare better. All things considered, we think India, Indonesia and the Philippines look better placed,” Morgan Stanley said.