'Opening' seen to ease quarantine despite COVID-19 variant arrival
MANILA, Philippines — The Philippines continues to see an “opening” to roll back remaining movement restrictions despite a new coronavirus variant detected in the country, a necessary step for the economy to bounce back from last year’s recession.
“Given the experience of other countries, I think there’s an opening,” Acting Socioeconomic Planning Secretary Karl Kendrick Chua said in an online forum hosted by the Financial Executives of the Philippines on Thursday.
“For now, there are new COVID variants so we take a step back and we assess when would be the proper time and how we would manage that risk,” he added.
Mutations of COVID-19 have hampered the pilot return of face-to-face classes supposedly this month, while a reimposition of travel barriers in 33 countries is feared by observers to expand and extend beyond the January 15 culmination.
Chua was not worried, reiterating a stance that classroom schooling would have to resume sooner rather than later for better learning. Apart from that, assessment is ongoing to allow children below 15 years old to go out with their families, whose activities Chua said represent 50% of economic output because of the Philippines’ young population.
“If family activities don't come back, we can’t expect the economy to also grow like before,” he pointed out.
How would all these reopening plans pan out would highly depend on preventing a fresh surge in COVID-19 cases, particularly the UK variant that was just detected here on Wednesday. It is a daunting task that government is yet to convince observers to be capable of doing. Fitch Solutions, a unit of the Fitch Group, is one of them.
In a separate briefing, Fitch Solutions said Thailand and the Philippines are “highly vulnerable to another outbreak” this year, stopping which is critical for Manila to realize Fitch's 7.6% growth forecast for 2021.
“Public infrastructure investment and the ability to ease domestic mobility restrictions will be key to the economic recovery,” it said.
Indeed, reopening the economy, supported as well by vaccine availability, is crucial to see the rosy projections realized. First Metro Investment Corp. (FMIC), the investment arm of Metropolitan Bank and Trust Co., is likewise banking on looser lockdowns to see a bounce back on economic output to 5.5-6.5% this year.
That growth rate, remains respectable, while below government target of 6.5-7.5%. Last year, FMIC projected the economy contracted between 9-10%. Full-year 2020 data will be released later this month.
“The roll-out of the vaccine and a more focused and localized restriction will likewise improve the country’s economic performance in 2021,” FMIC said in a statement, adding that a speed-up in infrastructure rollout and health spending would also support growth.
Private sector to benefit
More people movements will create a domino effect to the private sector, FMIC said. Corporate earnings could match economic growth at 5.5-6.5% this year, and a bigger expansion of 6-7% in 2022, an election year.
Low interest rates will keep borrowing costs low, helping drive the Philippine Stock Exchange index to 7,800-8,100 points by yearend. That, if realized, would represent a 14-18% jump from last year.
“The interest in offshore bond issuances will be sustained as rates in global markets remain low and liquid. In the equity capital market, more listings – IPOs (initial public offerings) both in the main board and SME board, REITs, and follow-on offerings – are expected this year as markets stabilize and investor demand grows strong,” FMIC said.
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