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GDP targets achievable if vaccine rollout ramps up in 2nd half, says NEDA


THE PHILIPPINE ECONOMY will achieve its growth target of 6.5-7.5% this year if the government ramps up its coronavirus disease 2019 (COVID-19) vaccination drive in the second half, a National Economic and Development Authority (NEDA) official said.

However, the Philippines’ economic recovery is still the most sluggish among Asia-Pacific economies, with gross domestic product (GDP) seen exceeding its pre-pandemic level only by the third quarter of 2022, according to Moody’s Analytics.

“We’re more bullish (on achieving the) 6.5-7.5% (GDP target). We are hoping that by the second half, we will have a substantial rollout of vaccines and therefore there would be renewed confidence in the economy,” said NEDA Undersecretary Rosemarie G. Edillon in a webinar on Tuesday.

Under the government’s short-term plan towards new normal, Ms. Edillon said the country should expect localized and targeted lockdowns to be implemented and current health protocols to be observed as long as the threat of COVID-19 remains.

“In the short term, we know that it’s about how to transition to a new normal. Physical distancing will still be observed, face coverings required. Even as we ease restrictions on mobility, we’re hoping that people will continue to comply. There will still also be strict hygiene and sanitation protocols, more outdoor than indoor activities, there would still be sporadic lockdowns but we’re hoping that these are very localized and targeted,” she said.

The number of new COVID-19 cases continue to rise, prompting local government units to reimpose lockdowns in barangays with high infection rates and implement curfews.

The Health department recorded 4,437 new COVID-19 cases on Tuesday, bringing the total to 631,320 to date. The death toll stood at 12,848 so far.

Jonathan L. Ravelas, chief market strategist at BDO Unibank, Inc., said the full-year GDP growth may only settle around 6% this year even as the vaccination program gains traction in the second semester because of the prolonged lockdown. First-quarter GDP will remain in contraction.

The vaccine rollout will boost consumer confidence, drive demand and keep businesses afloat, Mr. Ravelas said, although the government is unlikely to hit its target to inoculate at least 70% of its population this year based on its performance in past vaccination efforts.

He estimated it will take 1-3 years to administer vaccines to 70 million Filipinos.

Malacañang said in an online news briefing on Tuesday that more than 216,000 vaccine doses have been administered as of March 14.

Mr. Ravelas said the economy will likely post an “uneven” recovery this year, with companies in the technology and retail sectors and those with larger capital base to benefit the most. Other sectors, especially in travel, entertainment, hospitality and food, will still be adversely affected.

He said a “timed fiscal response,” even in small amounts, should provide the much-needed boost to restart the economy if it is rolled out when mobility restrictions are loosened.

Meanwhile, Moody’s Analytics expects the Philippines’ GDP to grow by 6.3% this year, quicker than the 4-5% projection it gave in February mainly due to base effects.

“It [the Philippines] continues to struggle to contain COVID-19, its fiscal policy response was quite limited, it has not yet developed an effective delivery system for vaccinations across its archipelago, and rising food prices limit the role of consumer spending to support the local economy,” Moody’s Analytics Chief APAC Economist Steven Cochrane said in a note sent to reporters on Tuesday.

All these factors could weigh on recovery prospects, with the Philippines likely to exceed its pre-pandemic GDP by the third quarter of 2022 — the slowest among Asia-Pacific economies. China and Vietnam are seen to surpass their pre-pandemic GDP levels by the second and third quarter of this year.

The country’s slow pace of recovery comes following a record 9.5% contraction in 2020, the price to pay for having one of the world’s strictest and longest lockdowns.

For now, the containment of the virus spread remains the major downside risk for the Philippines, Mr. Cochrane said. The country and Thailand are the laggards in terms of vaccination across the region.

“We cannot be sure that the spread of COVID-19 can be curtailed until vaccinations are more widely available because the quarantines in Metro Manila have not been completely effective,” Mr. Cochrane said in an e-mail.

“The lack of aggressive fiscal policy support means that a rebound in employment and small business operations from the long quarantines will be slow due to the need for small businesses to start up all over again and for workers to find employment,” he added. — Beatrice M. Laforga and Luz Wendy T. Noble

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