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THE RISK of recession for the Philippines has increased due to the growing COVID-19 case count, making it likely to be among the worst performing economies in ASEAN in the first half of 2021, Moody’s Analytics said.
“With additional targeted closures and foreign travel bans recently imposed, prospects for better consumer spending and tourism remain bleak and job gains in the coming months will be limited,” said Moody’s Analytics Associate Economist Dave. Chia in a note on Monday.
Earlier this month, Moody’s Analytics said it expects the economy to grow 6.3% this year, mainly due to the base effects of a record contraction of 9.5% last year, the worst in ASEAN.
“We maintain our perspective that the Philippines will be one of the worst performing economies in Southeast Asia, at least for the first half of 2021,” he said.
Moody’s Investors Service’s financial intelligence unit said the Philippines is now lagging behind in the region in terms of handling the outbreak. He noted that while the Philippines had to impose restrictions again due to rising infections, Japan and South Korea reported a decline in the number of cases.
The government has placed Metro Manila, Bulacan, Cavite, Laguna and Rizal under the strictest quarantine conditions due to higher case counts. The measures are in effect between March 29 and April 4.
TOURISM RECOVERY HINGES IN VIRUS MANAGEMENT
Slow vaccination and rising infections threaten the recovery of the tourism industry and could lead travelers to opt for other destinations they perceive as safer, analysts said.
“The Philippines will not be able to capitalize on the rebound in tourism if it cannot provide a safe environment for tourists; they will be diverted to other locations in Asia if there are lingering questions about safety and flight and accommodation cancellations due to a possible new wave of infections just around the corner, ”said Xiao Chun Xu, deputy director and economist at Moody’s Analytics. Business world Via email.
Mr. Xu said that the Philippines is doing worse than Vietnam and Thailand in terms of handling the crisis and ensuring a recovery of the tourism industry. He cited Thailand’s effort to negotiate travel bubbles, putting it in the best position to capitalize on the industry’s recovery.
Asian Institute of Management economist John Paolo R. Rivera said the hotel industry has been supported by the so-called “vacation home” trade, while some outdoor venues such as Intramuros and parks have been opened to the public. Some of these reopens turned out to be short-lived as quarantines were re-imposed.
“Given the latest restrictions, the first whose recovery process has been affected are those of the food and beverage sectors, since the dining room has been suspended again,” said Rivera.
In addition to ensuring herd immunity to push the lawsuit, Rivera said it would be crucial for the government to help the tourism industry develop the capacity to tap into alternative sources of income.
“It is about building confidence among tourists that the Philippines is a safe destination beyond minimum health standards,” he added.
Moody’s Analytics said accelerating the vaccination campaign will be key to improving the consumption-driven economy.
“Since consumption is an important component of the country’s economic activities, curbing the spread of the coronavirus and vaccination are key to its economic recovery,” said Moody’s Analytics.
The Health Department has reported that 508,332 doses have been administered as of March 23. The government expects to inoculate 70 million people by the end of 2021. – Luz Wendy T. Noble
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