Sustained PH recovery may be finally under way

The shift to more targeted lockdowns and the plan to ramp up mass vaccination will augur well for the Philippines’ economic recovery, which think tank Moody’s Analytics on Thursday said had been slowed down by prior missteps in pandemic response.

“The Philippines is beginning to take a more integrated approach to managing the economic impact of COVID-19. If executed well, this could finally help an economy that has been very sluggish under the weight of severe and lengthy lockdowns,” Moody’s Analytics chief Asia-Pacific economist Steven Cochrane said in the report “Philippines Launches New Plan on COVID-19.”

Cochrane was referring to the three strategies which President Duterte’s economic managers had said would facilitate economic rebound in the near term: fast-tracking the nationwide inoculation drive; incentivizing the vaccinated; and imposing localized quarantine in areas of high risk from the deadly coronavirus.

“Additional vaccine doses are being acquired and vaccinations will be universally available to all segments of the population beginning in October. This should slow the pace of COVID-19 and, it is hoped, reduce the severity of infections, at least among those vaccinated,” Cochrane said, referring to the plan to allow those not currently included in the priority sectors to be vaccinated next month. The Philippines had prioritized health-care workers, senior citizens, those with comorbidities and economic front-liners in its vaccination program.

Cochrane also lauded the plan to grant “preferred access available on public transit, in shopping malls and in restaurants for those with proof of vaccination” as “this will generate greater mobility for those vaccinated, which will help bolster economic growth as the vaccination rate rises.”

‘Granular’ lockdowns

But Cochrane cautioned that this incentive scheme “runs the risk of marginalizing those not vaccinated.”

Cochrane was also more optimistic about the shift to “granular” lockdowns instead of imposing the strictest quarantine levels whenever there had been outbreaks.

“There are few details on how this will be designed and implemented, but the proposal offers the potential of allowing greater access to shopping and other economic activities and boosting the pace of economic recovery,” Cochrane said.

He noted that during the first one-and-a-half years of the pandemic, “Philippine policymakers have relied primarily on severe and lengthy lockdowns across Metro Manila and much of the rest of the country to tame the pace of coronavirus infections.”

“Monetary policy was eased to provide liquidity and there has been some modest additional fiscal spending to keep businesses and the unemployed afloat during the period. And only a small amount of vaccine was procured with its distribution limited to the elderly, those at clinically high risk and to priority workers. All of this has been to little effect, as the number of new COVID-19 cases is now at a record high and the number of deaths per capita attributed to the virus is among the highest in the region. Only 11 percent of the population is fully vaccinated. The Philippines is experiencing the slowest economic recovery in the Asia-Pacific region,” he said.

Cochrane projected gross domestic product (GDP) growth this year at 4 percent, the lower end of the government’s downgraded 4-5 percent target range.

While citing that his growth forecast remained “relatively weak,” Cochrane said the government’s improved tack to fight the health and socioeconomic crises inflicted by COVID-19 “creates some upside potential to the pace of recovery but mostly for 2022, since most of this policy shift will not begin until this year’s final quarter.”

Last week, Socioeconomic Planning Secretary Karl Kendrick Chua told the Inquirer that nominal GDP this year would rise to between P19.42 trillion and P19.61 trillion if real GDP will grow within the 4-5 percent goal.

Last year, nominal GDP or total domestic goods and services output fell to P17.94 trillion from P19.52 trillion in 2019 as a result of the Philippines’ worst annual recession postwar.

Citing estimates of the state planning agency National Economic and Development Authority, Chua said nominal GDP was expected to rebound to between P21.42 trillion and P22.04 trillion next year if the economy expanded within the targeted 7-9 percent for 2022.