Moody’s Analytics, an economic research think tank, reported that the Philippines and other countries in Southeast Asia should re-open their economies with caution due to the prevailing risks from new COVID-19 strains.
Moody’s Analytics chief Asia-Pacific economist Steven Cochrane said, “While the current wave of the Delta variant is ebbing, the rapid response by policy-makers to ease movement restrictions could set the region up for another as-yet-unknown variant. The Philippines, Vietnam, Indonesia and Thailand are the most vulnerable given their low vaccination rates to date.”
Moody’s Analytics said the Philippines was “instituting more targeted movement-control orders, even as its daily caseload and coronavirus-related fatalities remain very high.”
Government recently implemented granular lockdowns instead of blanket quarantine restrictions, partly to encourage more consumer spending.
Moody’s Analytics projected the Philippines’ gross domestic product (GDP) to grow by 4% in 2021. The Philippine government projected a GDP growth of 4 to 5%.
For 2022, Moody’s Analytics estimated the Philippines’ growth rate at 6.4%, below government’s 7-9% target.
Unemployment rate was expected to improve to 8.1% this year and 6.9% next year from 10.3% in 2020, the highest in 15 years.
Moody’s Analytics said across the Asia-Pacific region, “a greater near-term threat is rising inflation.” It projected the Philippines’ headline inflation to average 4.1% this year, above the government’s 2-4% projection.
Inflation in the Philippines is expected to return to a within-target 3.5% next year. Moody’s Analytics said, “At this point, inflation exceeds central bank target rates in only four Asia-Pacific countries—Australia, New Zealand, South Korea and the Philippines … With the Philippines’ position as the weakest-performing Asia-Pacific economy, its monetary policy will remain on hold for most of the coming year.”