PH outlook ‘looking up,’ says Moody’s Analytics

The outlook for the Philippines is “looking up, for now” due to slowing COVID-19 infections that augured well for economic recovery and the reopening of more businesses under minimum health standards, according to Moody’s Analytics.

However, the think tank cautioned the government against reopening too quickly amid the lingering threat from more contagious virus variants, which inflicted stringent lockdowns in neighboring countries.

“Given the recent trend of virus resurgence and spread of the Delta variant across the Asia-Pacific, the Philippine government needs to be cautious in loosening its social restrictions,” Moody’s Analytics economists Katrina Ell, Dave Chia and Stefan Angrick said in a report titled “COVID-19 is Bruising Asia’s Recovery.”

Across Asia-Pacific, Moody’s Analytics noted that “COVID-19 management and containment is an ongoing challenge with various degrees of success as the Delta variant sweeps through the region.”

It pointed to the lockdowns recently reimposed in Australia, Indonesia, Japan, South Korea and Vietnam amid spikes in infections.

“A uniting theme of these economies struggling with a COVID-19 resurgence and renewed social distancing is their sluggish domestic vaccination schedules. All of these economies are far from herd resilience, making them vulnerable to ongoing lockdowns pressuring domestic demand and the broader recovery, a situation that may continue through the second half of 2021,” Moody’s Analytics said.

On Monday, President Duterte’s economic managers said the prevailing COVID-19 quarantine restrictions cannot be prolonged up to yearend to keep the pandemic-battered economy afloat, hence the government should focus on mitigating the risks and fast-tracking the nationwide vaccination program. Over the weekend, the Department of Finance (DOF) said it expected faster mass inoculation, as a result of incoming additional supply of COVID-19 vaccines during the next couple of months, to resume more jobs lost to the pandemic.

“The employment situation improved in May following the easing of stricter quarantine measures implemented in the NCR Plus Bubble area,” Gil Beltran, finance undersecretary and chief economist, noted in an economic bulletin on Saturday.

The unemployment rate eased to 7.7 percent last May from April’s 8.7 percent, although the number of jobless Filipinos was still high at 3.73 million.

To recall, NCR Plus—Metro Manila as well as the provinces of Bulacan, Cavite, Laguna and Rizal, which accounted for half of the economy—reverted to the most stringent quarantine levels before March ended up to mid-May after COVID-19 cases surged.

“Month-on-month, the number of employed increased by 3.34 percent while there was a significant decline in the number of underemployed (26.32 percent), unemployed (9.85 percent), and those not in the labor force (3.69 percent). As a result, the employment rate rose to nearly 92.3 percent while underemployment and unemployment eased to 12.28 percent and 7.7 percent, respectively,” Beltran said.

“All major economic sectors contributed to the partial recovery in employment. Agriculture employment modestly increased by 0.63 percent while those of industry and services rose by 4.29 percent and 4.2 percent, respectively,” Beltran added.

According to Beltran, “the imposition of stricter quarantine measures in the NCR Plus Bubble area cost the economy more than two million jobs lost in April” but “the easing of restrictions regained more than 1.4 million jobs in May, leaving more than 600,000 jobs yet to be recovered from the March employment level.”

“Nevertheless, it is encouraging that the May underemployment rate of 12.28 percent has fallen below its prepandemic level of 14.81 percent,” he said.

For Beltran, “the employment figures are encouraging and we have to make sure that the gains are not eroded.”

In particular, Beltran said “the arrival of more vaccine shots will provide the economy a big shot in the arm.”

Last Friday, Socioeconomic Planning Secretary Karl Kendrick Chua said 27 million COVID-19 vaccine doses were expected to arrive this and next month, such that the government was hopeful to achieve its goal to vaccinate all adults or 70 million Filipinos by yearend in order to achieve herd immunity.

Chua, who heads the state planning agency National Economic and Development Authority (Neda), said an average of 355,000 get inoculated daily, such that about 12 million doses had been administered to date, with 2.9 million already fully vaccinated with the required two shots.

“It is imperative, therefore, that the health risks posed by the epidemic be managed effectively and efficiently and the transmission of the virus contained, especially as new variants arise. Otherwise, the government will be forced to transition from risk-management stance to risk-avoidance posture and make the difficult and painful decision of imposing much-stricter quarantine measures. In this instance, in the process of attempting to stem the spread of the disease, the risk of inadvertently killing the proverbial patient increases,” Beltran said.