"Dealing efficiently with COVID-19 without locking down the economy is the recipe for quick recovery."
The Philippines will surely recover this year from a deep economic slump in 2020. But the rebound will not be enough to bring the economy back to its pre-pandemic levels.
The latest projections from the International Monetary Fund show a 6.9-percent growth this year considering an expected recovery in the global economy. The IMF was upbeat on its Philippine outlook despite the imposition of tighter lockdown measures in Metro Manila and surrounding provinces for two weeks. The country’s gross domestic product contracted 9.5 percent in 2020, the worst since the end of World War 2.
The Philippines per IMF’s assumptions will outpace the growth rates of its its peers in Southeast Asia. It expects Indonesia to expand 4.3 percent and Thailand to grow 2.6 percent. Vietnam’s economy will expand 6.5 percent while that of Malaysia will grow 6.5 percent.
The Philippines’ projected economic expansion this year, however, is deceptive. The growth will be measured on a low base. With the deep drop in economic activities in 2019 as a result of strict lockdown measures and restricted mobility, the 6.9-percent growth estimate of the IMF will not be enough to recover the big contraction last year.
The IMF, while expecting a reversal from last year’s economic slump, has conceded that the recovery will hinge on several factors. In particular, the Fund warned that the recent spike in virus infections could pose a “significant downside risk,” noting that “tightening quarantine measures could dampen economic activity.”
The Philippines’ economic recovery will also depend on the pace of the vaccine rollout program. The World Bank is aware of the Filipinos’ skepticism about available COVID vaccines and the government’s capacity to implement a large-scale vaccination.
The Philippines is in a similar predicament with Europe, which experienced second and third waves of COVID-19 cases. Europe, according to the IMF, may return to pre-pandemic levels in mid-2022 yet. China’s economy, in contrast, has already reached the pre-pandemic level, while the US is expected to do so this year.
The delayed economic recovery for the Philippines, meanwhile, is not entirely a bad development. Authorities know that the economy can quickly expand once consumer spending and confidence are restored. Dealing efficiently with COVID-19 without locking down the economy is the recipe for quick recovery.