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Philippines: Omicron clouds growth prospects for next year
MANILA, Philippines — The Philippine economy may see a strong last quarter, but sustaining this into the start of 2022 is uncertain amid the emergence of the Omicron coronavirus variant.
In its latest chart book, Capital Economics said the Philippines is up for another positive quarter in the October to December period.
This follows the stronger than expected economic performance in the third quarter at 7.1 percent despite the reimposition of lockdown measures during the period.
“Daily new cases have fallen sharply, restrictions are being eased further and our mobility tracker shows that the movement of people has risen to its highest since before the pandemic,” Capital Economics said.
Daily COVID-19 cases have been below 500 in the past weeks, prompting the government to continue easing restrictions.
Metro Manila and most provinces in the country will remain under Alert Level 2 until the end of the year.
Despite an expected rosy fourth quarter, Capital Economics warned this may not be sustained moving forward.
“The outlook for the next quarter and beyond is clouded by the uncertainty caused by Omicron,” the London-based think tank said.
“The new strain has already scuppered the planned December reopening to tourists. The ban on foreign tourists entering the country has been extended indefinitely,” it said.
Capital Economics noted that the relatively low vaccine coverage means that restrictions may need to be tightened again if cases rise.
While the Philippines has ramped up its COVID-19 vaccination in the past months, this remains slow compared to other economies in the region.
To date, the Philippines has fully vaccinated 44.2 million people or 40.3 percent of the population.
Meanwhile, Capital Economics maintained that the Bangko Sentral ng Pilipinas will keep interest rates low for a prolonged period to support economic recovery.
Last week, the central bank kept rates steady as headline inflation continues to slow.
“We expect inflation to decline further over the coming months. A bumper rice harvest has seen supply jump and will weigh on rice prices, which have a chunky eight percent weight in the basket,” Capital Economics said.
“As elsewhere in the world, energy price inflation should drop sharply as last year’s low base drops out of the annual comparison,” it said.
Source: https://www.philstar.com/business/2021/12/24/2149752/omicron-clouds-growth-prospects-next-year