Philippines seen to fully recuperate in 2023

MANILA, Philippines — Security Bank Corp. and ANZ Research said the Philippines is likely to fully recover from the impact of the pandemic only in 2023 despite the projected strong economic rebound this year and next.

In his year-end economic briefing, Security Bank chief economist Robert Dan Roces said the country’s gross domestic product (GDP) may expand by 5.1 percent this year and 6.5 percent next year after contracting by 9.6 percent last year due to the impact of the global health crisis.

Although the projected GDP growth next year is strong, Roces said the country could return to pre-pandemic levels only in 2023.

“As early as next year, we could be there but we can’t really characterize it as the return to pre-pandemic level already,” Roces said.

He explained the nominal figures would mean that it is higher than the pre-pandemic, but it is not yet the return to the quarterly output being expected.

“Probably that will come in 2023 if the second half of next year proves to be stable and that means of course that 2023 would be stable as well,” Roces said.

He said multiple factors that point to the rebound include the easing of mobility restrictions, higher number of fully vaccinated Filipinos, as well as the rollout of booster shots.

“We’re seeing encouraging data that signifies sustained long-term economic recovery, with continued improvements in private consumption, manufacturing production, public infrastructure spending, and external trade,” Roces said.

The continued vaccination of Filipinos has allowed the economy to slowly reopen, which in return boosted consumer and business confidence. The country emerged from the pandemic-induced recession with a back-to-back GDP growth of 12 percent in the second quarter and 7.1 percent in the third quarter.

“With looser curbs, mobility data in the country may reflect a strong rebound in domestic economic activity and improved business confidence,” Roces said.

Roces said consumption would remain a key driver in the fourth quarter growth that is expected to range between 5.5 and six percent.

“Overall investor sentiment continues to remain positive despite the threat of the Omicron variant prolonging the COVID-19 pandemic. We predict that herd immunity might be achieved in the country by March to May 2022, with vaccine rollouts continuing exponentially throughout the Philippines,” Roces said.

In its latest Asia economic outlook, ANZ Research said the Philippines would fully recuperate to its 2019 levels only in 2023.

ANZ sees the country’s GDP growing by 4.7 percent this year, by 6.3 percent in 2022 and by 5.9 percent in 2023.

The investment bank said domestic demand in the Philippines would remain handicapped by weak household savings, higher unemployment and sub-optimal capacity utilization.

“Although the number of new COVID infections has dropped remarkably, the government’s plans for a broad re-opening of the economy, including relaxing border measures have met with a major setback in the form of the Omicron variant,” ANZ said.

Although the recent pick-up in vaccinations is encouraging, ANZ lamented that herd immunity is still some distance away.

“Until the jab rate accelerates, the Philippines is at risk of falling behind in the race to reopen,” ANZ said.