MANILA, Philippines—Tourism and deployment of Filipino workers abroad may take a hit from borders tightened to keep the new Omicron variant of SARS Cov-2, the virus that causes COVID-19, away from the Philippines’ shores, but economists on Monday (Nov. 29) said containing the new version of the virus was crucial to sustaining economic reopening and rebound.
“Key is to guard borders, so everyone inside can have as normal a life as possible, and the economy can continue its recovery,” Socioeconomic Planning Secretary Karl Kendrick Chua said in a text message.
Just last week, Chua touted gains from restarting economic sectors which suffered from long and stringent lockdowns in the past. As the government changed tack to localized quarantine restrictions and fast-tracked mass vaccination, airlines, malls and fast-food chains saw sales and capacity increase, said Chua, who heads the state planning agency National Economic and Development Authority (Neda).
President Duterte’s economic team became more optimistic about fourth-quarter prospects en route to hitting the upper end of the government’s 4-5 percent gross domestic product (GDP) growth target for 2021.
However, last week’s reports on the emerging coronavirus variant of concern from southern Africa forced travel bans to be reimposed. Over the weekend, the Philippines already barred inbound flights from 14 countries which had reported Omicron infections.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort flagged a potential slowdown of further reopening of sectors like tourism, especially the entry of foreign travelers, and overseas employment.
The Philippines was just about to allow fully vaccinated foreign tourists to enjoy its many destinations.
Moves to contain Omicron here and abroad “could also potentially add to global supply chain disruptions and delays in terms of production and shipments,” Ricafort added.
“COVID-19, in general, remains a risk—we aren’t out of the woods yet,” said Robert Dan Roces, Security Bank chief economist. “However, what’s different now is that more people have gotten vaccinated so that, at least, should give a better chance at recovery compared with Delta,” Roces said. At least one-third of the Philippine population had already been fully vaccinated ahead of the three-day national vaccination drive that started on Monday.
“If there’s one thing that we learned from Delta, it’s that border restrictions will really help to contain a larger spread,” Roces said.
Despite the onslaught of the more contagious Delta variant during the third quarter and a revert to the most stringent lockdowns in August, GDP growth surprised at 7.1 percent year-on-year, indicating improving recovery prospects.
ING Philippines’ senior economist Nicholas Antonio Mapa said the switch to granular lockdowns “did appear to have helped bolster growth despite surging cases.” “Hopefully, this strategy can be just as effective versus possible future shutdowns,” Mapa said.
BDO Unibank chief market strategist Jonathan Ravelas agreed that Omicron won’t be much of a risk to economic rebound “if we take precautions.” “The recent move to protect the border is a prudent act to preserve our current gains in keeping low cases,” Ravelas said.
While global markets tumbled since last weekend when news about Omicron first emerged, Ravelas said that “what we saw today in the financial markets could just be a knee-jerk action.”
“The next move is to wait for what scientists will discover about the new variant. Is it more transmissible than Delta? Resistant to vaccines?” Ravelas added.
For Moody’s Analytics chief Asia-Pacific economist Steven Cochrane, “the Omicron variant of COVID-19 adds new measures of uncertainty to the outlook for the global economy, although it is too soon to adequately quantify that risk.”
“Will policymakers in the region respond by accelerating vaccination programs?” Cochrane said.
He said several countries and territories, which included Myanmar, Laos, Indonesia, Hong Kong, Thailand, the Philippines and Vietnam, have vaccinated less than 65 percent of target beneficiaries, or 12 years and older.
“A current second-round spike of the Delta variant in Vietnam illustrates the need to accelerate the pace of vaccination,” Cochrane said in a report on Monday.
“Will travel lanes continue to be opened between select countries?” he said.
“Already, travel and tourism is expected to be one of the slowest components of the Asia-Pacific economic recovery. Much of Southeast Asia, particularly the Philippines and Thailand, depend highly on the industry for growth,” Cochrane added.
“Further, what will the new variant mean for travel across the land border between Hong Kong and mainland China? This remains uncertain,” Cochrane added. Omicron had already been detected in Australia, Hong Kong, the Netherlands, United Kingdom, Belgium and Germany, indicating that it was spreading despite travel bans.