The new variant of the COVID-19 virus is an ‘inconvenience’ for the economic recovery of the PH: economist

MANILA – The new variant of the COVID-19 virus presents a downside risk to the Philippines’ economic recovery, an economist said Wednesday.

Michael Ricafort, RCBC chief economist, said countries around the world, including the Philippines, are expected to impose travel bans and some closures, which will “slow down” the global economic recovery.

He said that if the new variant is detected in the Philippines, the country is likely to implement more quarantine restrictions that may drag the prospects for a recovery in the local economy.

RCBC forecast a 6 to 10 percent contraction in the country’s gross domestic product (GDP) this year and growth of 6 to 7 percent in 2021.

“At least 6 percent growth would translate, well, by 2021, we would be back between 96 and 97 percent of 2019 pre-COVID levels for the entire economy,” Ricafort said.

Election spending that will begin next year before the 2022 presidential election can boost the economy’s growth, he said.

The national budget approved for 2021 and reforms such as the Corporate Recovery and Tax Incentives for Companies Act (CREATE) can also boost growth, he added.

However, some industries such as property and tourism will take longer before they can return to pre-pandemic levels, and some studies estimate that this will happen within 3-4 years.

The Philippine Management Association (MAP) agrees that the new variant of the coronavirus is clouding the country’s economic outlook.

He expressed support for the government’s action to prevent the spread of the virus to the country by banning travelers from countries where the new variant has been reported.

“For us, it is necessary because we really do not know the extent of the impact of the new variant,” said MAP President Francis Lim.

“So I think the government wanted to err on the side of caution. Of course, it is not easy to impose, prohibit the entry of travelers from some 19 countries, including some of the ASEAN brothers like Singapore. Hong Kong is also one of them. South Korea. We do business with them, “he added.

The government has implemented more extensive travel restrictions to prevent the spread of the new variant of the coronavirus that was first detected in the UK.

“We just have to take that bitter pill, because if it goes into the Philippines, we still don’t know what the real score is, so to speak. Our health sector, our health capacity is not as strong as others.” I agree with imposing that travel ban to those identified countries, otherwise the economy will suffer, “Lim said.

He shared that, according to estimates, the strictest blocking protocols such as the Modified Enhanced Community Quarantine (MECQ) cost the local economy 1.2 billion pesos a day.

Lim urged the government to quickly acquire vaccines against the deadly disease and inoculate as many people as possible.

“If we do that, then public confidence will regain. Even if shopping malls, shops, bars are opened, if public confidence does not return, the effect of opening the economy will not be as expected.” ” he said.

Lim added: “Until we inoculate at least 80 percent of our people, it will be difficult to get back to normal. Unfortunately, based on what people are saying, the earliest we can start inoculating people would be the second trimester, and some say towards the end of next year. “

MAP is the second group from the private sector to warn of the economic implications of the new reported variant.

Earlier, another major local business group, the Philippine Chamber of Commerce (PCCI), said that the country’s economic recovery will be delayed if the new variant enters the country.

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