Restaurants continue to operate in limited capacity amid the lockdown. — PHILIPPINE STAR/ MICHAEL VARCAS
By Beatrice M. Laforga, Reporter
THE PHILIPPINE economy likely grew at a much slower pace in the third quarter compared with the previous three months, after the Delta-driven surge in coronavirus cases prompted a stricter lockdown in the capital region.
Rajiv Biswas, chief economist for Asia and the Pacific at IHS Markit, told BusinessWorld that Philippine gross domestic product (GDP) was seen to have grown by 3.8% in the third quarter, sharply slower than the 11.8% expansion in the second quarter but better than the 11.6% contraction in the third quarter of 2020.
“The slowdown reflects the impact of stricter lockdown measures imposed in Metro Manila and some other areas due to escalating new COVID-19 cases during Q3 2021. This has disrupted consumption spending and also impacted adversely on many segments of industrial production,” he said via e-mail last week.
Sought for comment, Socioeconomic Planning Secretary Karl Kendrick T. Chua did not give his third-quarter GDP estimate but argued that the economy saw increased mobility this time compared with the more stringent lockdowns in 2020. He also indicated there was “some growth” in the third quarter, which ends on Sept. 30.
Local economists expected economic expansion to have slowed down in the July to September period, noting that the rise in COVID-19 cases driven by more infectious variants has hampered consumption and business activities.
Asian Institute of Management economist John Paolo R. Rivera said GDP may rise by 3% to 5% this quarter, while UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion gave a higher 5-8% forecast range.
“We have seen how damaging to the Philippine economy is the imposition of ECQ (enhanced community quarantine) like what happened from August to September. It is for this reason that I personally foresee that the Philippines is expected to see setbacks in economic growth figures for the third quarter due to the resurgence of COVID-19 infections driven by more infectious variants,” Mr. Rivera said via Viber on Sunday.
The government imposed a two-week ECQ in Metro Manila in August as it sought to contain its worst COVID-19 outbreak. This month, the government shifted to a new COVID-19 strategy, implementing granular lockdowns in areas where outbreaks are concentrated.
Economic shocks caused by the Delta outbreak were felt across the Association of Southeast Asian Nations economies in the third quarter, including Indonesia, Malaysia and Vietnam, according to IHS Markit’s Mr. Biswas.
He said the Philippines can only achieve a sustained economic recovery if vaccination ramps up and a bigger portion of the population is inoculated to allow the reopening of more businesses.
Around 17.7% of the Filipino population has been vaccinated as of Sept. 23. Mr. Biswas said the country’s vaccination rate remains low compared with advanced economies.
“The Philippines will continue to be vulnerable to new COVID-19 waves until the fully vaccinated share of the population reaches around 70% to 80% of the population,” he said.
“A key factor to achieving sustainable economic recovery will be ramping up the COVID-19 vaccination rate rapidly,” he added.
Mr. Rivera said outlook for the rest of the year remains highly uncertain and will depend on the country’s ability to contain new outbreaks, but the already-downgraded 4-5% growth target set by the economic team can still be achieved.
However, Mr. Biswas said IHS Markit is only expecting the Philippine economy to sustain its recovery next year, with GDP growing by 7.8% on expectations of a faster vaccine rollout by late-2021 or early 2022.
The National Economic and Development Authority estimated the long-run total economic cost of the pandemic and lockdowns could hit P41.4 trillion in 40 years.
Mr. Chua has said GDP may only go back to its pre-pandemic level by the end of 2022 or early 2023, while the growth path could only return to the pre-crisis trajectory in 10 years.