PH on the way to recovery, say economists

Easing lockdown restrictions and ramping up mass vaccination against COVID-19 will sustain economic growth in the fourth quarter and next year, economists said on Friday.

“We are on our way to our recovery—our second-quarter GDP (gross domestic product) grew by 11.8 percent. But we had the Delta variant in August, and that is why we scaled back in terms of our growth targets. But we’re confident that, looking at the numbers now in terms of COVID-19 [cases], we are looking forward to a very good fourth quarter,” National Economic and Development Authority (Neda) Undersecretary Rosemarie Edillon told a GoNegosyo virtual forum.

Economic managers had said the revert to stringent lockdowns in August to contain the spread of the more infectious Delta strain likely slowed year-on-year growth in the past quarter, although third-quarter GDP might be bigger than the second-quarter output given more mobility among workers.

Malaysian financial giant Maybank Kim Eng projected more optimistic growth rates for the Philippines this year and next year with the nationwide vaccination program in full swing.

In a report, Maybank Kim Eng analysts Chua Hak Bin, Lee Ju Ye and Linda Liu forecasted the Philippines’ real GDP growth in 2021 to hit 5.5 percent, above the government’s downscaled 4 to 5 percent goal.

In 2022, the Philippine economy would grow by 7 percent, at the lower end of the 7 to 9 percent target range, Maybank estimates showed.

Maybank said economic growth in Asean was expected to outpace that in China next year for “the first time since 1990, almost three decades ago.”

“Asean is gradually reopening and easing border controls as vaccination rates climb. We are forecasting Asean-5 (excluding Singapore) to expand by 5.6 percent in 2022, significantly above China’s GDP growth of 5 percent,” Maybank said.

“Asean’s growth recovery will be led by the Philippines (7 percent), Vietnam (6.7 percent), Malaysia (6 percent) and Indonesia (5.4 percent) in 2022,” it added.

Maybank noted that while China’s vaccination rate—currently with four-fifths of its huge population inoculated with at least one dose—was among the highest globally, its pace was slowing down while jabs in Asean were sharply picking up.

“Singapore has vaccinated 83 percent of the population with at least one dose, and Malaysia, 75 percent. We project Thailand’s vaccination rate reaching 70 percent by January 2022; Indonesia by April 2022; the Philippines by May 2022; and Vietnam by June 2022,” Maybank said. The 70-percent mark was the herd-immunity level targeted by most governments like the Philippines, which wanted to achieve such population protection by February of next year.

“High vaccination rates will allow Asean to reopen their economies and borders more permanently under a ‘living with COVID-19’ strategy,” Maybank said.

Beyond the pandemic, the Philippines, Indonesia, Malaysia and Vietnam were also expected to benefit from their young populations or what Maybank called a “demographic bonus.”

“Asean’s younger demographics imply an expanding labor pool and population base. Asean-6’s working age population will only peak in 2045, with the most favorable demographics in the Philippines (peak in 2060), Indonesia (2060), Malaysia (2045) and Vietnam (2040). Diverging demographics will support the reconfiguration in manufacturing supply chains towards Asean, a structural shift, which will strengthen with the economic reopening,” Maybank said.

Maybank also noted that the Philippines and Indonesia were undertaking foreign investment and tax reforms auguring well for economic recovery.