Omicron-driven upsurge dims optimistic economic outlook

Published January 10, 2022, 12:02 AM

by Manila Bulletin

As alert levels were raised to cope with the rapid surge in new COVID-19 infections, rays of optimism shone from the economic front, as reflected in the following upbeat headlines:
“NEDA sees ‘promising’ 2022 despite Omicron”;  “DOF still expects strong economic recovery”; and “BSP keeps steady outlook on inflation.”

Speaking for the National Economic and Development Authority (NEDA), Socio-economic Planning Secretary Kendrick Chua was unfazed by the tighter quarantine measures that were triggered by the highly transmissible Omicron variant. From all-time low numbers of cases reported during the Christmas holidays, the positivity rate has climbed sharply anew to 31.7 percent, topping the previous high of 29.7 percent recorded during the peak of the Delta variant surge last September.

Secretary Chua’s optimism emanates from the view that the country has “learned to manage the risks and live with the virus.” The current surge is viewed as “temporary,” especially in light of scientific findings that the infections attributed to the Omicron variant are generally mild and could be addressed without need for hospitalization or critical care.  Hence, the public has been urged to continue complying with health and safety protocols including masking, physical distancing, frequent hand washing and community sanitation.

Further escalation of vaccination efforts is also being pursued.  Aside from mass vaccination campaigns to raise the level of community protection, younger segments of the population — including those from 5 to 11 years old — are being targeted.  Initial reports indicate that unvaccinated toddlers and young children may have become unwitting carriers of the Omicron variant.

Two vital indicators of macroeconomic health — “manageable consumer price increases” and higher revenue collections — have stoked the Department of Finance’s optimistic outlook for 2022. In January to October 2021, the total revenue haul of the national government increased by five percent to ₱2.49 trillion from ₱2.37 trillion in the same period in the previous year.  The country also attained a lower December inflation rate of 3.6 percent, according to the Bangko Sentral ng Pilipinas (BSP).

These have offset the higher budget deficits caused by massive spending for the national health emergency.  Most importantly, sustained low interest rates have been maintained, enabling the country to maintain its coveted investment grade status despite the deep recession brought on by the pandemic.

While the extensive damage wrought by super-typhoon Rai (local name: Odette) may bring about supply disruption and a “temporary uptick in the prices of food items and other necessities in near term,” the BSP reiterated that it “stands ready to maintain its accommodative monetary policy stance to support the economy’s recovery while guarding against any emerging risks to its price and financial stability objectives.” Moreover, the BSP said that the implementation of reconstruction efforts and rehabilitation programs in areas damaged by the storm will be essential to support economic recovery and prevent job losses.

As Filipinos anticipate the start of the political campaign on Feb. 7, it is hoped that macroeconomic stability will pave the way for a smooth transition to a new national leadership.