Moody’s unit sees Philippines fully recovering in 2022

by Lawrence Agcaoili (The Philippine Star), 20 Nov 2020

MANILA, Philippines — The Philippines may fully recover from the impact of the pandemic only in the second half of 2022 as the country has to climb out of one of the deepest economic holes in Asia Pacific, according to Moody’s Analytics.

In its Asia Pacific outlook titled “Next year looks better for most of the region,” Moody’s Analytics chief economist Steven Cochrane said the Philippines, Japan, and India would exceed their fourth quarter 2019 gross domestic product (GDP) level only in the second semester of 2022.

“India and the Philippines were the two hardest hit by the economic impacts of the pandemic and have the deepest holes to climb out of,” Cochrane said.

Furthermore, Cochrane said the three hardest-hit economies – the Philippines, India, and Indonesia –have modest fiscal packages.

The Philippines slipped into recession as the country implemented the longest and strictest lockdowns in the world, placing Luzon under quarantine in mid-March to slow the spread of COVID-19.

The country’s gross domestic product (GDP) shrank by 10 percent from January to September, including the record 16.9 percent contraction in the second quarter.

The Philippines continues to struggle to contain the spread of the deadly virus with cases now at around 410,000 and more than 8,000 deaths.

The research arm of Moody’s Investors Service said there are local clusters that show remaining risks despite the ability of countries in Asia Pacific to contain the COVID-19 pandemic.

“First, Indonesia and the Philippines had the most persistently high daily caseloads, which have finally subsided, but remain uncomfortably high, and a recent spike in Indonesia

resulted in more movement restrictions in Jakarta,” Cochrane said.

He said Malaysia’s caseload is soaring, while a third wave has hit Japan.

On the other hand, Cochrane said China has returned to a new peak level in the second quarter, while Taiwan and Vietnam are seen hitting new peaks toward the end of the fourth quarter.

“The Asia Pacific economy is leading the global recovery from the pandemic. Barring any large-scale return of COVID-19, investors will likely bolster the region’s emerging markets,” he said.

Cochrane said trade is rising slowly in the Philippines, Japan, Thailand, Indonesia and India but not yet near to pre-pandemic levels.

“The economic recovery in the region would also not be complete until international travel and tourism flourish once again,” he said.

Philippine economic managers, through the Development Budget Coordination Committee (DBCC), are expecting a deeper GDP contraction of 4.4 to 6.6 this year and a slower recovery with a growth of 6.5 to 7.5 percent next year.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the country is expected to fully recover from the pandemic in 2022.

“We expect the economy to bounce back by maybe between 6.5 and 7.5 percent in 2021, but that means we have not fully recovered. Full recovery will take place in 2022,” Diokno said.