The Philippines’ repositioned approach in managing the economic impact of the prolonged pandemic could provide the much-needed support for recovery, Moody’s Analytics said.
Steven G. Cochrane, Moody’s Analytics economist said in a note on Thursday, Sept. 2, that the government’s more integrated response to COVID-19, “if executed well,” could finally help the “very sluggish” local economy.
Cochrane noted that the government’s severe and lengthy lockdowns in Metro Manila for much of the past 18 months have little effect on COVID-19 case and death counts.
He also pointed out that the monetary policy easing to provide liquidity along with some modest additional fiscal spending to keep businesses and the unemployed afloat during the crisis achieved only a minimal result.
“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,” Cochrane said.
“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,” Cochrane said.
The Philippines is also experiencing the slowest economic recovery in the Asia-Pacific region, he added.
However, Cochrane said a change is underway in the Philippines “toward a more integrated approach that lends some upside potential to the near-term outlook.”
“First and most important, additional vaccine doses are being acquired and vaccinations will be universally available to all segments of the population beginning in October,” Cochrane said.
He explained that the arrival of additional vaccines should slow the pace of COVID-19 and, it is hoped, reduce the severity of infections, at least among those vaccinated.
“Second, there will be preferred access available on public transit, in shopping malls, and in restaurants for those with proof of vaccination,” Cochrane said.
“This will generate greater mobility for those vaccinated, which will help bolster economic growth as the vaccination rate rises. It does, however, run the risk of marginalizing those not vaccinated,” he added.
Third, he said is the proposal that has been tabled to shift from the strict quarantines now in place to a policy of “granular lockdowns,” which would alternate periods of lockdown across areas, somewhat analogous to rotating groups into and out of office work spaces.
“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.
But despite Moody’s Analytics’ indication of some upside potential, Cochrane said their forecast for the Philippines' 2021 economic growth remains relatively weak at about four percent.
“This new integrated approach 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,” Cochraine said.
“We have not adjusted our forecast based on these actions, but we will be watching carefully for further details on their scope and execution,” he added.