Omicron restrictions to have ‘modest’ impact on PH
The recent reimposition of tighter mobility restrictions in Metro Manila and surrounding provinces amid a resurgence in COVID-19 infections during the holiday season could have a “modest” impact on the country’s growth recovery this year, with the Philippines seen to keep its recovery momentum going, economic think tanks said on Tuesday.
“The move by authorities to ‘tighten’ restrictions appears to take a page out of the playbook from the Delta surge in the third quarter of 2021. Back then, an enhanced community quarantine (ECQ) was implemented although several key sectors of the economy were allowed to operate at higher levels of capacity compared to previous episodes of ECQ. The same can be seen in alert level 3 for 2022 wherein public transport, government on-site operation and restaurants and malls are allowed to operate in order to preserve some economic momentum,” ING’s senior Philippines economist Nicholas Antonio Mapa said in a report.
Metro Manila and the provinces of Bulacan, Cavite and Rizal—which account for about half of the economy—were placed on one-notch stricter restrictions until Jan. 15. The government had shifted to localized alert levels unlike the blanket lockdowns in the past in order to keep economic sectors running, although at reduced capacity, when infections surge.
“Thus we can expect the impact on growth to be modest, although downside risks to the outlook remain,” specifically, the spread of the said-to-be milder yet more infectious Omicron variant.
Main threat
According to the latest ING projections, the country’s GDP would grow by 5.4 percent this 2022, in the absence of base effects that had boosted 2021 levels. Mapa had forecast quarterly GDP year-on-year growth levels as follows: 5.5 percent for first quarter, 7.4 percent for second quarter, 5.2 percent for third quarter and 3.3 percent for fourth quarter.
“The main threat to the recovery efforts would be Omicron’s impact on overall business and consumer sentiment, which prior to the onset of Omicron had begun to already show some signs of substantial improvement. Despite Omicron cases supposedly being mild, daily COVID-19 infections close to or past those seen during Delta may be enough to convince Filipinos to spend less time out and about and more time at home,” Mapa said.
In a report on Tuesday, Goldman Sachs Economics Research said that while Omicron was yielding bigger case loads across Asia-Pacific, “we do not expect these increases to approach the severity of the Delta wave restrictions in mid-to-late 2021,” citing that “protection against severe disease is much higher now, via both natural infections and the rapid progress in vaccinations across most of the region.”
Goldman Sachs said “the ‘late reopeners’—mainly South and Southeast Asian economies that had very tight domestic virus restrictions during the Delta wave—are apt to post the strongest 2022 growth.”
“This reflects relatively high rates of potential growth (near or above 5 percent in India, Indonesia, Malaysia, the Philippines, and Vietnam), relatively significant spare capacity, and still-meaningful virus restrictions in early fourth quarter of 2021. The lifting of most remaining restrictions in early to mid-2022 should contribute to strong service-sector recoveries in most of these economies,” Goldman Sachs said.
For 2022, Goldman Sachs projected economic growth to hit an above-target 7.3 percent —poised to be the fastest in Asean, owing to the country’s 6.5-percent potential growth, defined by the global investment banking giant as the annualized growth rate of potential output from 2017 to 2021.
