Omicron impact on PH seen to be mild

The impact of the Omicron variant of COVID-19 on the Philippine economy might be mild considering that manufacturing activities have so far declined less than in previous waves of infection of the new coronavirus, according to Capital Economics.

The London-based economic research consultancy firm said in a commentary— penned by Gareth Leather and Alex Holmes—that while the Philippines was the first country in Asia to be hit by Omicron, daily cases have been falling.

In fact, the number of cases of infection has dropped below their peak level in mid-January, Capital Economics noted.

“Compared with previous virus waves, the government responded with relatively light-touch restrictions,” the company said.

Also, citing the latest Manufacturing PMI (Purchasing Managers’ Index) report on the Philippines from IHS Markit, Capital Economics said the country eased down “only slightly to 50 in January.

The Department of Finance (DOF) has acknowledged that while the Philippine reading on the index has been declining, it has stayed above 50 since September, having settled at 51.8 in December. Such numbers indicate continued recovery in the manufacturing sector, the DOF said.

For Capital Economics, the decline to 50 was better than the slide down to 46.5 during the Delta variant wave in 2021 as well as the drop to 31.6 during the first wave of COVID-19 in early 2020

Back on track

“All this supports our view that Omicron will prove only a small stumbling block, and that the recovery will get back on track soon,” the company said.

IHS Markit economist Shreeya Patel described the latest PMI data for the Philippines as an “unfortunate start” to the year for the 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.”Data from the Philippine Statistics Authority show that as of November 2021, the value of production index for manufacturing improved with an annual growth rate of 26.5 percent from 25.9 percent in October. The November growth rate was also a turnaround from a decline of 25.4 percent seen in the same month of 2020.

At the same time, the volume of production index grew faster at 25.3 percent in November from 25.2 percent in December. It also meant a recovery from a decrease of 21.8 percent in the same month of 2020. INQ