WB Observes Poor Vaccine Launch; PH economy in ‘worrying state’

A combination of expensive consumer goods and slow mass vaccination at a time when COVID-19 is on the rise has prompted the World Bank to moderate its growth recovery expectations for the Philippines, while an economic research firm said the economy he was in a “worrying state.”

The World Bank (WB) on Friday cut its 2021 growth forecast for the country to 5.5 percent from 5.9 percent, down from the conservative 6.5 percent to 7.5 percent of the target. growth of the government’s gross domestic product (GDP) for this year.

GDP fell a record 9.5 percent last year, the worst post-war result, due to the region’s longest and tightest COVID-19 lockdown, which eliminated millions of jobs and closed thousands of businesses.

‘Slow’ reopening

Despite the World Bank’s degraded GDP projection, Acting Secretary for Socio-Economic Planning Karl Kendrick Chua said the government would stick to its growth target in the meantime.

“It is too early in the year to make changes. We always look at data to guide our projections, and we have nine months of data ahead of us, ”said Chua, who heads the state planning agency, the National Authority for Development and Economy (Neda).

It previously acknowledged negative year-on-year growth in first-quarter GDP due to a “slow” reopening of the economy.

The World Bank said in its April 2021 East Asia and Pacific Economic Update report entitled “Uneven recovery” that the Philippines had a “conservative” fiscal stance such that it was “spending less” on economic stimulus “due to a weak implementation “.

The Asian Development Bank’s updated database of its member countries ‘COVID-19 policy measures showed that the Philippines’ war chest to fight the pandemic stood at $ 25.99 billion (approximately P1.26 trillion) or 7.06. percent of GDP from 2019 to March 22. and the monetary responses deployed against COVID-19 amounted to $ 240.48 per capita, around P11,664 per Filipino based on Friday’s exchange rate.

“Our economic stimulus measures are among the most important this country has ever had. However, we take into account what we can spend quickly and efficiently, ”said Finance Secretary Carlos Domínguez III, President Duterte’s economic director, in a speech to Filipino and Singaporean businessmen on Friday.

Lawmakers are seeking another stimulus package under the proposed “Bayanihan 3” bill, which economic administrators did not support.

The economic team had said that outstanding disbursements under the Bayanihan to Recover as One Act, or Bayanihan 2 Law extension, as well as this year’s record P4.51 trillion national budget would be enough to fuel economic recovery.

But estimates from the state think tank Philippine Institute for Development Studies (PIDS) showed that at least two more rounds of donations amounting to at least P163.4 billion would be needed to minimize the number of Filipinos who could temporarily slip back into poverty. in the midst of the prolonged pandemic.

The World Bank noted the “high national transmission” of COVID-19 in the country and that it was “lagging” in the region in terms of mass vaccination, and there were “concerns about the efficacy and safety” of vaccines in the Philippines.

The country’s vaccination program showed that as of March 17, only 0.2 doses had been administered per 100 people, equivalent to 216,000 doses.

Singapore led the region with 13.54 percent, followed by China (4.51) and Mongolia (4.26). The other countries with more COVID-19 doses than the Philippines were Indonesia, South Korea, Malaysia, Cambodia, and Laos.

Greater income inequality

Myanmar, Thailand and Vietnam had lower doses than the Philippines. Papua New Guinea, Timor-Leste, and the Pacific Islands have not yet started vaccinations.

“In countries where COVID-19 control has not been achieved, such as Indonesia and the Philippines, rapid vaccination is a priority to reduce the high number of deaths and pressure on struggling health systems,” he said.

The challenge for these countries is to procure enough vaccines and combat vaccine concerns through effective information campaigns.

The World Bank said the Philippine economy is expected to recover in the medium term, but this would depend on an improved external environment, a successful vaccination program and the relaxation of movement restrictions.

However, he said the scars of the pandemic-induced recession will be felt more in distressed households and further widen income inequality between rich and poor.

As a result, poorer families are more likely to reduce their food consumption, accumulate debt and sell assets, undermining their ability to recover from the crisis, the World Bank said.

Reacting to the bank’s recommendation to relax movement restrictions, presidential spokesman Harry Roque said such restrictions did not lead to a complete shutdown of the economy and allowed companies to operate.

Roque said the government has avoided even stricter quarantine regulations despite the increase in COVID-19 cases, as it was important to keep the economy open so that people did not go hungry.

“I don’t think we are imposing a prolonged blockade. In fact, our economy is open except for some industries, ”Roque said at a televised press conference.

Roque said that after the economic downturn last year, things were looking up, as can be seen in the amount of investments that are coming in and the emergence of new businesses.

‘Reasons for concern’

Economist Katrina Ell of economic research firm Moody’s Analytics said in a report Thursday that rising infections and limited amounts of vaccines in the Philippines, along with rising inflation and a “large output gap” they were “cause for concern.”

The inflation rate increased by an average of 4.5 percent during the first two months, above the target range of 2-4 percent established by the Banko Sentral ng Pilipinas, mainly due to the fact that the prices of food, especially of products pigs rose as world oil prices normalized.

“Demand inflation is weak and will remain so through the June quarter” amid stricter but localized quarantine restrictions reimposed in high-case areas within Metro Manila and four neighboring provinces that account for half the economy, Moody’s said. Analytics.

With limited vaccines available, the Philippines faces continued short-term outbreaks, he said.

“The government is opposed to national lockdowns, but the recent rise in local infections means that the economic recovery could more easily stall for at least the first half of 2021,” added Moody’s Analytics.

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