Philippines seen as economic laggard in ASEAN

MANILA, Philippines — The Philippines is set to become a laggard in Southeast Asia with the deepest economic contraction as it struggles to control the COVID-19 outbreak, according to Maybank Kim Eng.

Maybank is now looking at a deeper GDP contraction of 7.8 percent instead of 6.5 percent this year for the Philippines, bigger than the contraction in Thailand with 6.2 percent, Singapore with 5.7 percent, Malaysia with 5.4 percent, and Indonesia with 1.8 percent.

Among the Association of Southeast Asian Nations (ASEAN)-6, only Vietnam is expected to book a GDP growth of 2.9 percent.

“The Philippines, which imposed one of the strictest and longest lockdowns, has been struggling to flatten the pandemic curve and is facing the slowest recovery in mobility,” Maybank said.

Despite implementing the longest and strictest lockdowns in the world, the Philippines continues to struggle controlling the spread of the virus with COVID-19 cases more than 440,000 with close to 9,000 deaths.

Economic managers through the Development Budget Coordination Committee (DBCC) are now expecting a deeper recession with a GDP contraction of 8.5 to 9.5 percent instead of 4.4 to 6.6 percent this year.

The DBCC sees a recovery with a GDP growth of 6.5 to 7.5 percent for 2021 and 8.5 to 10 percent in 2022.

Maybank said the Philippie economy may grow at a faster rate of 5.8 percent for 2021 and 6.2 percent in 2022.

This would be slower than Vietnam’s 6.8 percent, but faster than Indonesia’s 5.3 percent, Malaysia’s 5.1 percent, Thailand’s five percent, and Singapore’s 4.5 percent.

“We forecast ASEAN-6 real GDP growth recovering to 5.3 percent in 2021 and five percent in 2022 after contracting 3.8 percent in 2020. The recovery will be more U-shaped than V for most of ASEAN, with real GDP returning to pre-pandemic levels only in early 2022,” it said.

Maybank pointed out a significant easing of lockdowns and border controls can only materialize in the middle of 2021 when vaccines are widely available.