The negative impact of Typhoon “Odette” and the Omicron variant of COVID-19 on the economy will be felt in the coming months based on hints from January data, according to private-sector analysts, but the government sees a rosy picture based on information as of December.
London-based research firm IHS Markit said in its latest Philippines Manufacturing PMI (Purchasing Managers’ Index) report that there was a renewed decline in factory output and new orders amid COVID-19 and Odette.
Meanwhile, the Department of Finance (DOF) said trade data as of December indicate sustained economic recovery, although acknowledging that the continuing threat from COVID-19 endangered the momentum toward economic growth.
In a bulletin sent out over the weekend, the DOF noted that the value of Philippine merchandise exports in 2021 reached $192.4 billion, representing not only a 24-percent surge from 2020 earnings but also a 5.4-percent growth from prepandemic or 2019 exports.
At the same time, the DOF said import value for 2021 was, at $117.8 billion, also 5.5-percent larger than the 2019 level.
The DOF said that IHS Markits PMI report showed a 51.8 reading for the Philippines. It added that considering that the Philippine PMI has stayed above 50 since September, the numbers indicate continued recovery in the manufacturing sector.
“As the country continues to grapple with the risks posed by the COVID-19 virus and its variants, the country needs to continue to be vigilant and be ready to respond with the appropriate measures lest the recovery momentum be lost,” Finance Undersecretary Gil Beltran said.
“To this end, the sustained vaccination drive for Filipinos and a calibrated reopening of the economy will be key in helping the Philippines preserve the gains in containing the virus,” Beltran said.
He said the recently approved amendments to the Retail Trade Liberalization Act, along with other economic liberalization initiatives such as the amendments to the Foreign Investment Act and the Public Service Act, were expected to support the continued recovery of trade and economic activity in general.
But IHS Markit economist Shreeya Patel said the latest PMI data revealed an “unfortunate start” to the year for the Philippine manufacturing sector.
Patel said material shortages and delivery delays were prominent, and continued to apply pressure on vendor performance.
“Whilst the full impact of the typhoon and the Omicron variant are unknown, it’s clear production will certainly be impacted in the coming months as companies adapt once again,“ Patel said. “Firms will hope for a quick recovery and remain prepared through advance ordering strategies.”
Citing the latest PMI from IHS Markit, which showed the Philippine reading reduced to 50 in January, ING Bank Philippines senior economist Nicholas Mapa said growth momentum would likely take its cue from virus containment.
“Growth momentum could be hampered should the country experience additional COVID-19 waves in the coming months,” Mapa said.
He predicts that Philippine gross domestic product will grow by 5.3 percent in 2022, slower than 5.9 percent in 2021 and lower than the government’s target of 7 to 9 percent. INQ