Moody’s Analytics says
International economists have sounded the alarm over the Philippines’ economic situation as the World Bank said the nation is suffering a triple whammy blow from the COVID-19 pandemic, while Moody’s Analytics describes the unfolding events in the country as “worrisome.”
The World Bank flagged the government’s failing coronavirus containment measures, weakening overseas Filipino remittances, and the nation’s heavy dependence on tourism as drags to the Philippines’ economic return to growth trajectory.
Financial intelligence firm Moody’s Analytics, meanwhile, noted that the Philippines is becoming a worry in the Asia Pacific region as the recent sharp resurgence in COVID-19 infections and slow vaccine rollout are tagged along with accelerating food prices and a large output gap.
Aaditya Mattoo, World Bank East Asia and the Pacific chief economist said the Philippines is one of the countries that suffered the triple whammy during the pandemic, which was further aggravated by natural calamities.
“I think, for Philippines right now, the domestic priority has to be to first of all contain the disease. You've seen you know a resurgence in cases and that I think it is really worrying,” Mattoo said in a virtual briefing on Friday, March 26.
Mattoo said the recent developments in the country should compel the government to provide additional relief to its people.
The Duterte administration’s economic team was earlier quoted as saying that additional relief measure is not needed, noting that there are already pandemic response measures under the 2021 national budget and previous Bayanihan laws.
“We are expecting the government to play a super demanding role… to provide relief, which in Philippines case will still be needed because you saw such a substantial contraction by nearly, as I said, 10 percent,” he said.
The World Bank economist noted that the Duterte administration’s fiscal response has been timid due to implementation lags, which may delay the nation’s return to its pre-coronavirus levels.
The Washington-based multilateral lender has revised downward its Philippine economic growth forecast this year to 5.5 percent from an earlier estimate of 5.9 percent.
World Bank’s lowered outlook has further weakened against the Duterte administration’s 2021 target of 6.5 percent to 7.5 percent gross domestic product (GDP) expansion pace.
In a separate research note released on Friday, Katrina Ell, Moody’s Analytics economist said the Philippine economy is in a worrisome state.
Ell explained that the elevated inflation, a large output gap, a recent resurgence of COVID-19 infections and limited vaccine availability are all reasons for concern.
“Recent reports indicate that the archipelago has only received enough vaccines for one percent of the population, with current estimates indicating that the population won’t be fully vaccinated until 2023,” Ell said.
She also noted that the reinstated quarantine measures in Metro Manila and adjacent provinces due to the spike in COVID-19 cases would stall the country’s recovery plan.
“The government is opposed to national lockdowns, but the recent spike in local infections means that the economic recovery could easily be further stalled at least through the first half of 2021,” the Moody’s Analytics economist said.
Meanwhile, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said addressing the increase in the number of COVID-19 cases is the top priority for the Inter-Agency Task Force (IATF).
Chua said the government will continue increasing its testing capacity and rolling out the vaccination program while adhering to minimum health and safety standards.
However, these strategies also need to be balanced with the overall impact of the pandemic on human welfare and development, Chua said.
“To help Filipinos cope with the impact of the pandemic and the community quarantines, the 2021 budget has P284 billion worth of subsidies and assistance. We need to ensure that the implementation of these programs are accelerated.” Chua said.