PH economic risk high due to COVID-19 woes

MANILA, Philippines — The Philippines ranked among Asia-Pacific countries with the highest economic risk due to the prolonged COVID-19 pandemic, placing 15th among 20 countries ranked by Moody’s Analytics.

Moody’s Analytics on Monday came out with its Relative COVID-19 Economic Risk Index, which ranked countries in the region using a weight of 50 percent on the vaccination rate, and 25 percent each on new COVID-19 cases and deaths per one million population over the latest seven-day period.

“All three factors ought to be taken into consideration to determine the relative economic risk as countries with any combination of low vaccination rates, high incidence of new cases, and high death rates would be at high risk of longer and stricter movement controls that would slow or constrict the pace of economic growth,” Moody’s Analytics explained.

Ranked No. 1 or with the lowest risk was Singapore, followed by China, Cambodia, Hong Kong and Japan.

Among Asean (Association of Southeast Asian Nations) members, Laos was in 9th place while Brunei was a notch higher than the Philippines at 14th.

Four other Asean countries, which recently grappled with their worst outbreaks placed below the Philippines: Indonesia (16th), Vietnam (17th), Thailand (19th), and in last place, Malaysia.

Lockdowns

Per factor, the Philippines ranked 13th in Asia-Pacific on the vaccination rate with 12 percent of its population fully vaccinated.

In terms of new cases per million population, the Philippines was in 15th position with 135.6 new infections per one million Filipinos.

As for new deaths, the Philippines was also in 15th place with 2.349 deaths per a million population.

“The Relative COVID-19 Economic Risk Index provides an indication of where further risk may lie from the economic consequences of COVID-19. Those that rank low could face still longer lockdowns or stricter social distancing measures if conditions do not improve. And if this is the case, those governments may have to respond with further fiscal support to manage the economic hit to households, small businesses, and industries hit particularly hard by COVID-19,” Moody’s Analytics said.

In this regard, Moody’s Analytics projected the Philippines’ gross domestic product (GDP) to grow 4 percent this year —at the lower end of the government’s downgraded 4-5 percent growth target.

“The Philippines and Indonesia will struggle with less effective COVID-19 policies — vaccine shortages and ineffective social distancing measures — that create much uncertainty on the timing of a rebound,” Moody’s Analytics said.

Moody’s Analytics expects headline inflation to breach the Bangko Sentral ng Pilipinas’ (BSP) 2-4 percent target range and end 2021 at an average of 4.3 percent. The unemployment rate would also remain elevated at 7.9 percent, Moody’s Analytics’ estimates showed.

Retail sales would likely grow by 9.4 percent this year, a reversal of the 10.2-percent drop last year amid the Philippines’ worst post-war annual recession.

Moody’s Analytics said that in terms of economic recovery, “the Philippines, Malaysia, Singapore and Hong Kong have been the most volatile; each experienced a quarter-to-quarter decline of GDP in the second quarter of this year.”

While the Philippines’ GDP jumped 11.8 percent year-on-year during the second quarter due to the low base from last year’s most stringent lockdown which stopped 75 percent of the economy, the April to June output shrank 1.3 percent compared to first-quarter GDP as Metro Manila and four surrounding provinces accounting for half of economic activities reverted to enhanced community quarantine (ECQ) in April amid a surge in COVID-19 cases.

Metro Manila again returned to a 15-day ECQ this month due to the threat from the more contagious Delta strain of COVID-19.

Moody’s Analytics said that while the Asia-Pacific region as a whole was already benefiting from global trade recovery, “the Philippines, New Zealand and Japan have only modest gains in the nominal value of their exports over pre-pandemic peaks and the outlook is not strong.”

“The Philippines has only a small exposure to goods trade with the US,” Moody’s Analytics noted.