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PHL, India return to pre-pandemic levels by end-2022 uncertain

MOODY’S ANALYTICS said the recovery in the Philippines and India will lag the rest of the Asia-Pacific (APAC), with both countries struggling to restore their economies to pre-pandemic levels by the end of next year.

In a note issued Wednesday, “The APAC Economy: Looking Forward to 2021,” Moody’s Analytics Chief Asia-Pacific Economist Steven Cochrane said in the case of the Philippines, the coronavirus disease 2019 (COVID-19) outbreak remains uncontained, while the government’s stimulus spending is among the smallest in the region.

In the report, Moody’s Analytics downgraded its 2020 gross domestic product forecast for the Philippines to a contraction of 9.9% from the 8.2% contraction it projected in November.

It now expects the economy to grow 4.5% this year and 6.2% in 2022.

“Much of the region will have regained all of its lost output by the end of 2021, although India and the Philippines will struggle to reach this benchmark by the end of 2022,” it said.

On Wednesday, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said at a forum that the Philippines is expected to recover the economic output lost last year by mid-2022.

Mr. Cochrane said the region is poised to bounce back stronger than the rest of the world as most countries in the region have contained their outbreaks, except for the Philippines and Indonesia. He added that the region’s manufacturing supply chains are focused on goods in demand during the recovery phase, like computers, mobile phones, technology equipment, pharmaceuticals and protective gear.

Accommodative monetary policy by central banks in the region will also help fast-track the rebound, coupled with large recovery packages.

He said the Philippines and India will lag their peers because the two governments were “least committed to fiscal stimulus, even though they were the two most hard-hit economies from COVID-19 and their subsequent lengthy and strict quarantine policies.”

The note also cited the region’s relatively fast action in procuring COVID-19 vaccines.

“An important exception is the Philippines, which has made little progress so far,” it added.

Citing data from the Duke Global Health Innovation Center, Moody’s Analytics noted that only the Philippines has not yet bought any COVID-19 vaccines out of the 21 economies tracked.

“Currently, however, there remains a risk that the smaller emerging markets in APAC will be among the last to have enough vaccine doses,” Mr. Cochrane said.

He said the region could also benefit from an expected foreign policy shift when President-elect Joseph R. Biden, Jr. takes office this month.

“Yet whether still struggling to gain lost output or expanding their economies to new heights, all countries within APAC will grow in the coming year. Risks to the outlook include the perniciousness of COVID-19, which could cause deeper economic shutdowns in Europe and North America that would staunch the global trade in goods that is so important to the APAC economy.” — Beatrice M. Laforga

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