Economist sees slim chance of 5% GDP growth

The Philippine economy may be hard-pressed to even grow by 5 percent this year as no relief is yet in sight from the coronavirus (COVID-19) pandemic a year since the outbreak, prompting a return to tough lockdown protocols.

This was according to Romeo Bernardo, economist at New York-based think tank Global Source, who said in a research note dated April 5 that the present crisis was a “concrete display of what has kept us worried all this time and why we have not been able to shake off a more pessimistic outlook for the economy.”

At the beginning of the year, median forecasts of 13 institutions polled by the Inquirer indicated that the Philippines might grow by 6.5 percent this year, rebounding from the trecord 9.5-percent contraction last year.

With the recent return to hard lockdowns due to surging COVID-19 cases last month, various analysts have downgraded their GDP growth forecasts with cuts of as much as 1.8 percentage points, reducing projected growth to below 6 percent.

“From where we stand, these lowered forecasts look quite high. We had capped our GDP forecast to 5 percent just two weeks ago before the hard lockdown,” Bernardo said. “The odds of reaching that cap is getting slimmer.”

Unattended gaps

Bernardo noted gaps in managing the pandemic that had been left unattended, most notably weak contact tracing that increases the odds of more exposures. He also cited the state health insurance agency’s failure to pay its obligations to hospitals, thereby reducing the private sector’s capacity and incentive to expand facilities and staff compensation.

Increased complacency all around in complying with basic health measures was also largely to blame, he noted.

“Moreover, it is not even clear at this time what role the more transmissible variants of the virus played in the latest surge. On the other hand is the delayed procurement and thus, slow rollout of vaccines with one chart we’ve seen showing the Philippines lagging even Bangladesh, Cambodia and Sri Lanka in vaccination,” Bernardo said.

“So far, the country has relied on China for almost 80 percent of its vaccine supply, a source that some fear may be put at risk following renewed diplomatic tension arising from the month-long unwelcome presence of Chinese ships in an area within the Philippine’s exclusive economic zone,” he added.

Overall, Bernardo said President Duterte’s decision to extend the lockdown through April 11 was not unexpected considering experts’ prognosis that a one-week lockdown would not be enough to control the surge in COVID-19 infections.

No ECQ extensionThe first week of lockdown curbed the growth rate of new cases but these remained very high, overwhelming health workers and facilities especially in Metro Manila. There have been news of COVID-19-positive patients dying while waiting to be admitted in overcrowded hospitals in Metro Manila and even in surrounding regions.

“The signal from Malacañang is that the ECQ lockdown will not be further extended.

So far, estimates by epidemiologists show that the reproduction rate in Metro Manila has dropped from around 2 in mid-March to 1.6 as of Easter and is further projected to drop to 1.3 with the ECQ extension. The hope is to bring the number closer to one to help reduce hospital occupancy. Given the signal from Malacañang, this target is likely to be achieved by transitioning [Metro Manila and adjacent provinces] first to the looser modified ECQ (MECQ) for a week at least,” he said.