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Economic recovery counting on vax program

The government’s strengthened vaccination drive against coronavirus disease 2019 ensures economic recovery and granular lockdowns can mitigate the impact of the pandemic, according to economists. 

In a reply to questions from Philippine News Agency, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said granular lockdowns, which is being pilot-tested in National Capital Region (NCR) since last September, “would be a de facto measure to further reopen the economy or at the very least reduce the drag on the economy.” 

He said NCR continues to move towards population protection, with almost 80 percent of the adult population getting their shots against COVID-19. 

Citing government figures, Ricafort said more than 50 million Filipinos have received their shots against the virus, with over 23 million now fully vaccinated. 

“Increased vaccination vs. COVID-19 would help the country gradually win the war vs. the unseen enemy, which is COVID-19. Full vaccination sharply reduces the risk of COVID-19 infections, severe cases/hospitalization, and deaths, thereby reducing the burden on the health care system and correspondingly reduces the risk of lockdowns, going forward,” he added.

Ricafort said continued vaccination drive and reopening of the economy “bode well for the country’s economic recovery prospects for the coming quarters/years, albeit in a gradual manner, in view of the need to further reduce new COVID-19 cases amid risks related to the unvaccinated.”

“The country’s economy could return back to pre-COVID levels as early as the latter part of 2022 or by 2023, but the recovery of other businesses/industries, especially those hard-hit by the pandemic last year, would realistically take much longer,” he added.

The domestic economy, as measured by gross domestic product, posted its first expansion in the second quarter of this year, with a growth of 11.8 percent, ending the five-quarter contraction since the first quarter of last year. 

The International Monetary Fund slashed anew its growth forecast for the Philippines this year from 5.4 percent to 3.2 percent, citing the impact of the quarantine measures to address the uptick of COVID-19 infections due to the Delta variant. 

This growth forecast is lower than the government’s 4 percent to 5-percent growth assumption for this year, which has also been revised down twice amid the impact of latest developments on the economy and the pandemic. 

ING Bank Manila senior economist Nicholas Mapa said the latest cut in IMF’s 2021 growth forecast for the country “reflects the view that growth momentum has slowed considerably after the initial reopening of the economy last year.” 

Mapa said the year-on-year growth expansion from April to June this year is a result of base effect, referring to the decades-low economic contraction of -17 percent in the same period last year. 

He cited improvements compared to last year but the country may have to settle for a 3.7-percent full year expansion this year, which represents only a modest recovery considering the -9.6 percent 2020 GDP.

The government has implemented three enhanced community quarantine (ECQ), the strictest movement restriction level, in the NCR since 2020, one of which was last year. 

Economic managers said the two two-week ECQs this year, one in late March and the other in August, are not expected to negatively impact the economy as much as it did in 2020 because more people were allowed to work.*PNA

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September 2022

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