The Omicron variant of COVID-19 may prevent the government from hitting its target of a 7 percent to 9 percent economic growth this year as infections hamper election campaign activities while consumers rebuild savings instead of going on “revenge spending,” according to ING Bank NV.
Nicholas Mapa, ING’s senior economist in the Philippines, said in a research note that consumers have shifted gears to securing a booster shot from a flurry of spending during the holiday season.
“After putting together a seemingly good [second semester of] 2021, authorities now expect growth to zoom to 7 percent to 9 percent this year, touting vaccination efforts, a sustained march to reopen the economy, revenge spending, the election year and that lockdowns never bother us anyway,” Mapa said.
“We do however need to remind ourselves that this time last year, growth was expected to jump to 6.5 percent to 7.5 percent due mainly to the same reasons put forward yet again: vaccination, reopening, revenge spending and the vow to never resort to lockdowns,” he added.
The Philippine Statistics Authority pegged growth in gross domestic product at 7.1 percent year-on-year in the third quarter of 2021.
This put nine-month growth to 4.9 percent, which was near the high end of the government’s goal of 4 percent to 5 percent.
“And although the [fourth quarter] of last year will undoubtedly show a strong print, we are almost certain that the straight line growth momentum expected for this year will at the very least see some wind knocked out of its sails as Omicron runs roughshod in NCR+ ,” Mapa said, referring to Metro Manila and nearby provinces.
Whether the spread of Omicron would result in hard lockdowns that in the past hobbled the economy, it would likely dent both consumer and business expectations in the near term.