MANILA, Philippines — A global think tank sees the Philippines to suffer the most from the pandemic in Asia-Pacific as its continued failure to control COVID-19 infections incurs a huge dent on economical recovery.
In its latest outlook, London-based Capital Economics said the country’s road to economic recovery will be the most sluggish in Asia and its output may have to wait till 2024 before regaining its prepandemic potential. “A failure to contain the virus and lackluster fiscal support means that the Philippines will experience the slowest recovery in the region,” Capital Economics said in its emerging Asia economic outlook report for the second quarter of 2021.
“Lasting damage from the pandemic is likely to be greatest in the Philippines. Failure to suppress infections has required restrictions to remain in place for longer than elsewhere in the region,” Capital Economics said.
COVID-19 cases in the country are nearing the one million mark and while strict quarantine measures have been in place for almost a month now, the average daily tally of new cases remains high.
Capital Economics has lowered its 2021 gross domestic product (GDP) growth forecast for the Philippines for a second time.
It now expects the Philippines to grow 7.5 percent from the 9.5 percent projection last month. Its original forecast was set at 11 percent.
While this falls within government targets, this is still smaller than the pre-crisis trend by far the largest gap in the region.
Inflation for the year will also likely settle at four percent, higher than the 2020 level of 2.6 percent and its earlier projection of 3.8 percent.
“The latest wave of infections will increase the lasting damage from the pandemic, including business insolvencies, weaker household balance sheets and high unemployment. Lackluster fiscal support will make these economic scars worse,” the think tank said.
Among countries in Southeast Asia, the Philippines and Thailand reintroduced restrictions to contain the new wave of COVID-19. China and Taiwan have fully recovered while Vietnam is not far behind.
Capital Economics said the hospitality and leisure sectors would bear the brunt anew. Manufacturing, construction sites, and rise in online shopping would likely offset at least some of the drop in sales from physical shops.
While a successful vaccination rollout would be the country’s game changer, Capital Economics said progress has been disappointing as only one percent of the population has been inoculated, almost two months since the start of the programme.
“The slow rollout raises doubts about the government’s ability to meet its target of inoculating 60 percent of the population this year,” it said.