New COVID-19 surge dashes Duterte's hopes for early shift to 'Alert Level 1'

MANILA, Philippines — A new surge in cases that triggered a retightening of curbs have dashed President Rodrigo Duterte's hopes for the entire country to transition to the most relaxed restrictions this month. But analysts believe the fresh wave won’t derail recovery as the country learns to live with the virus.

In mid-December, the inter-agency Development Budget Coordination Committee (DBCC), which set the state’s economic targets, said the country is “now in a much stronger position to manage possible spikes in cases and safely reopen the economy to alert level 1 in January 2022” despite threats from new coronavirus variants. At the time, news about the heavily-mutated Omicron variant was already worrying experts, but the DBCC nevertheless said further easing of curbs may be possible this month because of “our effective management of COVID-19”.

But nearly a month later, the Philippines is experiencing another spike in infections that, the health department said, have the potential to peak this month. Assuming the latest surge is being driven by the more contagious but less virulent Omicron strain, local health officials said cases may even surpass the previous wave caused by the more lethal Delta variant.

Both Finance Secretary Carlos Dominguez III and Socioeconomic Planning Secretary Karl Kendrick Chua said the DBCC might meet again to revisit their targets. But as it is, easing pandemic restrictions to Alert Level 1 this month is unlikely to happen.

Already, the Department of Health said the Philippines is back to being a “high-risk” for Covid-19, with capital Metro Manila and nearby provinces of Cavite, Bulacan and Rizal returning to stricter Alert Level 3 restrictions, from Alert Level 2 previously.

“We have just started. (The surge may last) maybe after six weeks depending on the mobility of the people," Benjamin Co, an infectious disease expert, said in an interview, adding that the Delta variant likely remains as the dominant strain in the country.

“But I would not be surprised if Omicron overtook,” Co continued.

At its meeting last month, the DBCC upgraded its growth forecast for 2021 to 5-5.5%, from 4-5% previously, following the forecast-beating 7.1% expansion in the third quarter of last year despite Delta’s onslaught during that period.

The growth target was retained at 7-9% for 2022, when the DBCC expects the economy to return to its pre-pandemic form. That said, an early shift to Alert Level 1 — in which all businesses are allowed to operate at full-site capacity, but still subject to minimum public health standards — would have made this goal easier to hit.

Living with the virus

For Jun Neri, lead economist for Bank of the Philippine Islands, the domestic economy could "do well even with tight measures" in place, citing the country’s experience with the Delta-driven surge last year.

"Alert Level 3 will surely be a damper,” Neri said. “The economy will likely exhibit its ability to live with the virus throughout most of this year." 

Nicholas Antonio Mapa, senior economist at ING Bank in Manila, agreed, adding that the economy’s ability to withstand an Omicron-fueled wave lies on the impact of new restrictions on businesses and consumers.

"The main threat to the recovery efforts would be Omicron's impact on overall business and consumer sentiment, which prior to the onset of Omicron had begun to already show some signs of substantial improvement,” Mapa said.

“Despite Omicron cases supposedly being mild, daily Covid infections close to or past those seen during Delta may be enough to convince Filipinos to spend less time out and about and more time at home," he added.

For Sonny Africa, executive director at IBON Foundation, a non-profit think tank, the Duterte administration should focus on public health measures so as not to hamper economic activity. 

"Rather than pretend that its granular alert levels are meaningful, the government should pay more attention to spending on urgent public health measures like mass testing, proper contact tracing, and supporting quarantined individuals to contain COVID-19 including Omicron,” Africa said.

“If it doesn't then it's the surge in cases that will cause uncertainty, repress consumer spending and economic activity, and depress GDP," he added.