The Philippine economy is expected to grow by 4.3% this year — slower than originally expected — due to recurring coronavirus infection surges in the region, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
AMRO’s latest estimate published on Friday is weaker than the 6.9% forecast it gave in March, and is near the lower end of the government’s 4-5% full-year growth target.
The research office also cut its growth outlook for 2022 to 6.7% from 7.8%, below the 7-9% target set by economic managers for next year.
Among the Association of Southeast Asian Nations (ASEAN), Singapore is expected to grow the fastest this year at 6.3%, followed by the Philippines, Malaysia (4.1%), Indonesia (3.8%), Laos (2.9%), Cambodia (2.8%), Vietnam (2.6%), Brunei (2.1%) and Thailand (0.8%). Economic output in coup-stricken Myanmar is expected to shrink by 18.7%.
The Philippine economy grew by 11.8% year on year in the second quarter, though it declined 1.3% on a quarterly basis.
“The recurring waves of infections foreshadowed half-a-year ago have indeed materialized, with the attendant impact on regional growth,” AMRO said. “The greater risk at this stage is the continuing mutation of the virus into potentially vaccine-resistant strains that could have important implications for the economy.”
Metro Manila and some provinces were placed under a strict lockdown again in March and August amid a fresh surge in infections, the latest of which were spurred by a more contagious Delta variant.
Restrictions were relaxed as infections declined, allowing for more business activities to resume. Active cases rose by 5,823 to 66,838 on Friday, according to data from the Health Department.
“As policy space continues to narrow in the region, the rollout of vaccination programs — coupled with increasing realization about the endemic nature of the virus — could become a crucial game changer for growth,” AMRO said.
The Philippine government has fully vaccinated 22.48% or 24.307 million of its population, according to Johns Hopkins University. The government seeks to inoculate 70 million Filipinos by year-end.
AMRO said the region’s vaccination rate is crucial because it could allow travel bubbles and the possibility of reopening the tourism and hospitality industry.
“But full resumption is likely to take a while, given the wide variation in vaccination rates across the region, ranging from below 15% in Myanmar to more than 80% in Singapore, largely due to supply considerations,” it said.
“The ebb and flow in infections even in some highly vaccinated economies further underscore the complexity of economic reopening,” it added.
AMRO noted that the Philippines, Malaysia, China, Hong Kong and Vietnam have experienced improved exports due to a steady demand for electronics, computers and cars.
“However, this momentum had started to wane in May, as the Delta variant triggered fresh restrictions across the region,” it said. “In China, the outbreaks in its eastern and southern provinces have weighed on factory output in recent months.”
The Philippine economy shrank by a record 9.6% last year. — Luz Wendy T. Noble