Government economic managers are on higher alert with the COVID-19 Omicron scare to curtail its possible impact on growth, lockdowns to contain transmission, and other collateral damage to the economy.

The Department of Finance (DOF) was first to call for an effective method to minimize the collateral damage of the new variant while the Bangko Sentral ng Pilipinas (BSP) is still insisting that the Philippines, as far as pandemic response is concerned, is “doing well”.

“It is important that the risks posed by the epidemic (Omicron variant) be effectively managed to minimize the collateral damage on the economy and, consequently, people’s incomes,” according to the latest DOF Economic Bulletin, which was submitted to DOF Secretary Carlos G. Dominguez III.

BSP Governor Benjamin E. Diokno said on Friday, Dec. 3, that it is best for all sectors including those in government to allow the medical and healthcare sector, including the pharmaceutical industry, to assess the effects of the Omicron variant on current pandemic response before going into panic mode.

“We need to calm down,” said Diokno. “Based on the right metrics, the Philippines is doing well. Let’s hear from the medical experts and scientists. Pressing the panic button based on speculation is grossly counterproductive,” added the BSP chief.

Based on the DOF Economic Bulletin, the country’s economy is well on the mend, citing the 7.14 percent gross domestic product (GDP) growth seen in the third-quarter which has partially recovered the lost output in the same quarter of last year.

To recall, the local economy tanked by nearly 11.6 percent from July to September 2020. Quarter-on-quarter, the GDP grew by 3.8 percent, reversing the 1.4 percent decline in the previous quarter.

The third-quarter growth is higher than the median private sector outlook of 4.7 percent. For the first nine-months, output increased modestly by 4.88 percent compared to the 10 percent decline a year earlier.

However, the new Omicron variant, first reported by South Africa, has already cast the world’s recovery into doubt, with the European Union health agency warning it could cause more than half of Europe’s coronavirus cases in the next few months.

But the DOF is optimistic that the arrival of more vaccine supplies and the ramping up of the vaccination program will help provide protection to the population from the spread of the virus.

The passage of Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and other tax reforms and the continued infrastructure drive will help the country’s economic competitiveness, the DOF said.

"To complement these, restrictions on foreign participation in the economy should be eased. Amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act will improve the country’s standing in mobilizing more foreign capital to the country,” it added.

The real GDP as of end-September 2021 was still 5.7 percent short of returning to its pre-pandemic levels, data from the Philippine Statistics Authority showed.

Socioeconomic Planning Secretary Karl Kendrick T. Chua, however, expects the sustained recovery in the coming months would bring country’s economy back to pre-pandemic levels of activity by the first quarter of 2022.

“In the remaining eight months of the Duterte administration, our top priority will be laying the foundation for a COVID-19 resilient society that can live with the virus. We will return to the path of rapid and more inclusive growth,” Chua said.