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Omicron impact mild for Philippines – think tank
MANILA, Philippines — Current developments in the country are starting to become encouraging after Omicron hit, proving that the COVID variant is unlikely to have a significant impact on the economy.
In its weekly outlook, international think tank Capital Economics maintained that the Philippines is seeing some good news after the latest COVID-19 wave due to Omicron, although the country has been hit harder than its neighboring economies in the region.
Senior Asia economist Gareth Leather reiterated that the impact of Omicron is expected to be mild, especially as daily confirmed cases have started to drop again.
Daily COVID-19 cases in the country fell below the 10,000 level last week after consecutive days of record-high cases in mid-January.
“Compared with previous virus waves, the government responded with relatively light-touch restrictions. Our mobility tracker has held up much better this time and has recently started to improve again,” Leather said.
Metro Manila and a few provinces were downgraded to Alert Level 2 starting this month following the drop in cases.
Capital Economics added that the latest manufacturing data fell back in January, but the pace of decline was slight.
The country’s headline purchasing managers’ index (PMI) fell to 50 in January from 51.8 in December 2021, registering at the no-change threshold that separates expansion from contraction.
“At 50, it is, in theory at least, consistent with output stagnating rather than falling,” Leather said.
This compares to the drop to 31.6 during the first wave in 2020 and to 46.5 during the Delta wave in August last year.
“All this supports our view that Omicron will prove only a small stumbling block, and that the recovery will get back on track soon,” Leather said.
Further, inflation also eased to three percent in January, returning to the central bank’s target band, mainly due to a higher base.
But Leather noted that this was almost entirely due to food shortages following typhoons and should prove temporary.
Capital Economics is expecting that inflation will stay comfortably within the government’s target for the entire year.
As inflation continues to cool, the Bangko Sentral ng Pilipinas maintained that it sees “ample scope to keep a patient hand.”
The think tank projects that BSP will keep its main policy rate on hold for the rest of 2022 even as consensus expects a 50 basis point hike.
Source: https://www.philstar.com/business/2022/02/08/2159220/omicron-impact-mild-philippines-think-tank