Herd immunity by year-end or early 2022 likely, says think tank

The Philippines may attain herd immunity against COVID-19 by the first quarter of 2022, if not by the end of this year, as the rollout of coronavirus vaccines picks up pace with the help of the private sector, said New York-based think tank Global Source.

Japanese investment house Nomura, meanwhile, said it expected the modified enhanced community quarantine (MECQ) to remain in place for another one to two months, noting that the latest two-week extension was unlikely to sufficiently bring down cases and ease hospital occupancy rates to safer levels.

With the slow vaccine rollout program, Nomura said only 20 to 25 percent of the Philippine population would likely be vaccinated by the end of the year versus the government’s target of 50 percent, “leaving the country susceptible to recurring waves of COVID-19 outbreaks throughout the year.”

Subsequently, Nomura said economic pressure might force the government to relax the measures further but the approach to reopening would likely be more cautious than before this time around.

Malacañang recently announced an extension of the MECQ by two weeks to May 15 to help decongest the country’s overburdened healthcare sector.

While local governments supported the MECQ extension, they also proposed a hybrid model that would keep the MECQ label but would allow more flexibilities, beginning with the shortening of curfew by three hours beginning May 1.

n an April 29 research note written by economist Romeo Bernardo, Global Source viewed the cautious approach positively even as it wondered how much incremental activity the local government units’ tweaking of the lockdown rules would generate.

“However, the smarter way in which the current lockdown is being carried out, with less mobility restrictions and with businesses and the public learning to adapt, implies that the cost will be less than last year’s strict lockdown. We still think GDP (gross domestic product) growth is unlikely to exceed 5 percent this year but we have become more optimistic about 2022 prospects given a more promising vaccination outlook,” it added.

“In particular, we now have more confidence that with the help of the private sector, the government has more than even odds of achieving its herd immunity target of inoculating 50 million people if not within the year, then by first quarter 2022. This compares favorably with our initial expectation of end-2022.”

Global Source’s critical assumption is that the vaccines will arrive as scheduled or at least that delays will not be very long. It noted uncertainties coming from the vaccine export ban imposed by India, the diversion of orders to India, Brazil and other hot spots, and the possible need for an early booster jab for countries that are advanced in their vaccination program. The US’ export ban has likewise restricted supplies needed for vaccine production in India, home to the world’s largest vaccine manufacturing plant.

The Philippine’s high dependence on Chinese vaccines and recent territorial tensions in the West Philippine Sea/South China Sea are seen to add to the supply uncertainty.

Another key assumption, according to Global Source, is that as vaccine supplies build up, the government will relax its strict adherence to a complicated multi-tier prioritization program to allow more simultaneous vaccinations and minimize delays due to hold-ups from vaccine resistance.

In a separate research note dated April 29, Nomura said the recent MECQ extension was consistent with its assumption that lockdown protocols would be extended for a month or two. This is seen to result in a “fairly weak” economic recovery of 5.5 percent coming from a 9.6-percent contraction due to the coronavirus pandemic.

“The main rationales for our more cautious view include the significant economic impact of the lockdowns (even if less stringent than last year), the fragile starting point with unemployment rates rising again, limited prospects for a sizeable fiscal support package, and monetary policy that is hamstrung by inflation risks,” Nomura said.

In addition, it noted that vaccine procurement and the rollout have been slow relative to regional peers.