The Philippines’ shift to granular lockdowns would augur well for its economic recovery, the World Bank said, while urging the country to ramp up mass vaccination outside Metro Manila, where jabs against COVID-19 have been slow in coming.
“COVID-19 cases in the Philippines appeared to have peaked in September … The authorities have relaxed strict quarantine measures, hoping to improve the labor market following a worsening of the unemployment rate. The less stringent measures boded well for manufacturing, exports and credit growth,” the World Bank’s Philippine office said in a report on Friday.
The World Bank noted that the unemployment rate rose to 8.1 percent in August mainly due to the reimposed enhanced community quarantine in Metro Manila and other Delta variant “hot spots,” but overall, less stringent restrictions plus base effects jacked up factory output that month and overall manufacturing activities in September.
The easing of quarantine measures led to “stronger domestic demand,” which jacked up the Philippines’ imports by a faster 30.8 percent in August, the World Bank said.
The World Bank also pointed to the revert to bank lending growth last August as another green shoot of recovery.
“Outstanding loans of universal and commercial banks increased by 1.3 percent in August following a 0.7-percent decline in July. This is the first reported expansion after eight consecutive months of contractions. Contributing to the improvement in the total bank credit was the increase in outstanding loans for production activities, driven by the growth in loans for real estate activities, information and communication, and manufacturing,” it noted.
Philippine Guarantee Corp.(PhilGuarantee) president and chief executive Alberto Pascual told the Inquirer last week that credit guarantees by the state-run firm improved in the third quarter alongside increased lending by banks. Pascual did not provide the third-quarter figures pending clearance from the Department of Finance (DOF).
Pascual earlier noted that banks had become risk-averse amid the prolonged pandemic that impacted on both credit supply and demand, which in turn slowed borrowings and guarantees extended to mostly badly hit small businesses at the start of this year.
Cumulative PhilGuarantee approvals and bookings during the first half reached P2.09 billion, already over half of the P4-billion target for 2021. Pascual was optimistic to achieve this year’s target with the help of more active banks.
“Of the 34 banks we accredited, only about half are actively submitting applications,” Pascual said in July, adding that they expect two big banks to start submitting guarantee applications soon, without disclosing these lenders.
The World Bank report noted that the Philippines pushed its target to achieve herd immunity or 70 percent of the population protected mainly through vaccination to February 2022, instead of the earlier goal by yearend, “due to still prevalent vaccine hesitancy and delivery constraints.”
“This target is more optimistic than the World Bank’s projection of 60-percent vaccination coverage in the Philippines by the second quarter of 2022. Nonetheless, the vaccination rate has reached 80 percent of the adult population in Metro Manila by mid-October, in stark contrast to about 30 percent for the rest of the country. Vaccine supply, on the other hand, has improved with 31 million vaccine doses stockpiled as of the first week of October,” it said.
Despite these recent gains in mass vaccination, the World Bank said the overall pace of the Philippines’ vaccination program remained behind rollouts in Indonesia, Malaysia, Thailand and Vietnam.
In September, the World Bank cut its 2021 gross domestic product (GDP) growth forecast for the Philippines to 4.3 percent from 4.7 percent previously as the recent outbreak of COVID-19’s more contagious Delta strain and relatively slower inoculation drive stalled economic rebound.