The International Monetary Fund warned Friday that the uptick in COVID-19 cases and the possibility of a longer lockdown in Metro Manila and adjacent provinces present significant downside risks on the Philippine economy.
IMF resident representative to the Philippines Yongzheng Yang said in an online briefing his team was monitoring the developments on the latest containment measures implemented by the government to contain the spread of the virus, including the new Delta variant, from Aug. 6 to 20.
“This current uptick [in new infections] is a downside risk… The [IMF] team is closely monitoring what is going on… It is a significant downside risk and we have to see how this affects mobility and PMI [Purchasing Managers Index],” Yang said, referring to a gauge of manufacturing.
Yongzheng said while the containment measures or lockdowns became smarter, more targeted and had less impact on economic activity, they could still affect production.
“But it is [still] a downside risk that we should bear in mind…,” Yang said.
The IMF in its report in June reduced the 2021 growth forecast for the Philippines to 5.4 percent from 6.9 percent previously, taking into account the surge in new COVID-19 cases in April which could slow economic recovery.
An IMF team led by Thomas Helbling conducted virtual discussions with officials of the Bangko Sentral ng Pilipinas, the economic cluster of the government and other public and private sector representatives about the Philippine economy for the 2021 Article IV Consultation from May 21 to June 11, 2021.
The IMF, however, raised its 2022 growth forecast to 7 percent from 6.5 percent made in April 2021.
Yang did not say if there would be a downward GDP revision for the Philippines if the ECQ in Metro Manila and adjacent provinces would be extended.
He said in a presentation that the economy’s rebound would continue in the second half and in 2022, aided by the faster pace of vaccination, substantial economic policy support and a stronger global recovery.
“The economy could recover faster than expected if quarantine measures could be eased sooner, especially if reinforced by faster progress in vaccination,” Yang said.
The economy rebounded strongly in the second quarter by growing 11.8 percent, the fastest since the 12-percent increase in the fourth quarter of 1988, partly due to base effect. This was a significant recovery from the 3.9-percent contraction in the first quarter and the 17-percent drop a year ago.
The government is targeting a GDP growth range of 6 percent to 7 percent this year, on the back of the rollout of the vaccination program that could spur business and consumer confidence.
