Philippines tourism rebound faces setback
DEBT watcher Fitch Ratings said the Philippines’ tourism rebound will be subject to setbacks as the global epidemiological scenario evolves.
“Many APAC (Asia Pacific) economies had been implementing reopening strategies prior to the Omicron variant, driven by falling virus cases and accelerating vaccine rollouts,” it underscored in a report released on Tuesday.
Thailand was first to ease border restrictions in early November, followed by Vietnam, Malaysia and the Philippines, according to the credit rating agency.
However, it said the emergence of the Omicron variant has thrown some economies’ reopening plans into disarray for the time being.
As a result, despite increased vaccine coverage and stepped-up reopening efforts, Fitch Ratings forecasts a gradual rebound in international travel across Asia Pacific this year.
“The evolving global epidemiological situation poses a high degree of uncertainty and a tourism recovery in destinations with low vaccination rates, such as the Philippines and Indonesia, will remain vulnerable to setbacks,” it cautioned.
“Pent-up travel demand remains to be diverted domestically,” the credit rater added, “as we believe it will take time to restore confidence in cross-border travel safety.” For his part, ING Bank Manila senior economist Nicholas Antonio Mapa said the action by authorities to “tighten” regulations appears to be based on the Delta rise in the third quarter of last year.
“Back then, an ECQ (enhanced community quarantine) was implemented,” he emphasized, “although several key sectors of the economy were allowed to operate at higher levels of capacity compared to previous episodes of ECQ.” According to Mapa, this may be seen in Alert Level 3 for this year, which allows public transportation, government on-site operations and restaurants and malls to function in order to maintain some economic momentum.
The National Capital Region has been placed under Alert Level 3 from January 3 to 15 as Covid-19 cases skyrocketed over the past week amid the holiday season. Under Alert Level 3, intrazonal travel will be subjected to restrictions set by local governments.
“Thus we can expect the impact on growth to be modest, although downside risks to the outlook remain,” the economist noted.
He went on to say that the major threat to the recovery efforts would be Omicron’s impact on broader business and consumer sentiment, which had begun to show signs of significant improvement previous to Omicron’s arrival.
Despite the alleged mildness of Omicron cases, daily Covid-19 infections comparable to or exceeding those seen during the surge caused by the Delta variant may be enough to persuade Filipinos to spend less time out and about and more time at home, according to Mapa.
Second, he said that growth prospects in 2022 will no longer be aided by the favorable base that existed last year.
“The true test of the recovery would be to gauge whether the Philippines is capable of notable outsized growth sans the base effects from the 2020 -9.6 percent plunge,” Mapa added.
It should be emphasized that the interagency Development Budget Coordination Committee maintained its economic growth forecast for this year at 7 to 9 percent, up from the estimated 5- to 5.5-percent increase last year.