Recovery only seen by Q2 2021 as stimulus lags

People are slowly returning to malls in the Philippines despite the rise in the number of coronavirus infections. — PHILIPPINE STAR/MICHAEL VARCAS

THE Philippine economy’s recovery will only likely pick up by the second quarter of 2021 due to delays to its fiscal stimulus and lapses in controlling the pandemic, according to an analyst.

“We think that the economy won’t really begin to rebound, maybe by the second quarter of 2021 — just given the delays to fiscal stimulus really getting underway and the handling of the crisis,” Fitch Solutions Senior Country Risk Analyst Michael Langham said in a webinar on Monday.

Fitch Solutions in August downgraded its outlook for the Philippine gross domestic product (GDP) to -9.1% from the -2% it gave in May. This is much worse than the 4.5% to 6.5% contraction estimate by the government for this year.

Meanwhile, it expects the country to grow by 6.2% next year, slower than its previous 6.5% estimate and the 6.5%-7.5% projection by the government.

“There was a new package announced but the delays in distributing those funds and the fact that it has come with a quarter of the year left to go, we think that growth in 2020 is going to suffer quite a bit,” Mr. Langham said.

He was referring to the Republic Act (RA) No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II) that was signed into law earlier this month. It provides an additional P165.5 billion for the country’s pandemic response.

This is the sequel to RA 11469 or Bayanihan I in March that allocated P265.5 billion to address the crisis.

“We’ve seen delays in adding further stimulus despite the difficulties in containing the outbreak,” Mr. Langham said.

“We’ve seen lockdown measures reimposed or sort of ease again, and then re-tighten them. There’s a clear challenge among authorities in terms of containing the health risks,” he added.

The Health department on Monday reported 3,073 new confirmed coronavirus infections to bring the total to 307,288 cases.

The government has imposed tight lockdowns in the country since March and has lifted restrictions by June. However, Metro Manila and some surrounding provinces were placed under stricter measures for two weeks in August to slow the contagion and prevent the healthcare system from collapsing.

Citing Google mobility data, Mr. Langham said retail, mobility and transit activities in the Philippines continue to be relatively low compared with historical trends, suggesting the consumption-driven economy is still in the doldrums.

He said such activities were also lower compared with regional neighbors such as Thailand, Malaysia, and Singapore that had success in dealing with the pandemic.

“Much will depend on how Philippine authorities continue to implement fiscal stimulus, and getting a better handle on COVID-19 outbreak domestically,” he said. — Luz Wendy T. Noble





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