INTERNATIONAL think tank Moody’s Analytics said the country’s growth in the second quarter of the year proved to be “disappointing,” bolstering their view that the Philippines will be among the last countries in the region to recover economically.
In a research note on Monday, Moody’s Analytics said Philippine recovery has been affected by the relatively strict movement controls during the quarter as the country continued to struggle to contain Covid-19 cases.
“The early signs of recovery in the Philippine economy have proved to be short-lived…. The sluggish vaccine rollout coupled with decentralized health advice and poor adherence to social distancing measures are to blame. Conditions are not much better in the current quarter, as movement controls remain in place along with elevated infections,” Moody’s Analytics said.
The research firm also said the slow pace of the vaccination rollout remains a major drag and a downside risk to the Philippines’s economic recovery as only 10 percent of the total adult population of the country is fully vaccinated.
Moody’s Analytics further warned that the country may be forced to prolong the “costly mobility restrictions” if the number of Covid-19 cases continues to be elevated.
Given these conditions, the think tank said they maintain their assumption that the country will not recover lost output up until next year.
“We maintain our expectation that the Philippines will be amongst the last in Asia to regain lost output from the pandemic. The Philippines is not expected to return to pre-pandemic levels until mid-2022,” Moody’s Analytics said.
The think tank also noted that while in terms of annual figures, the country’s gross domestic product (GDP) in the second quarter of the year surged by 11.8 percent, the country still recorded a 1.3-percent contraction in seasonally adjusted GDP for the period.
Moody’s Analytics also noted that the growth came largely due to base effects as the country contracted by 16.9 percent in the second quarter of 2020.
“Major sectors of the economy rebounded off a low base effect last year, particularly manufacturing, real estate and construction. However, output from most sectors still fell short compared with the second quarter of 2019,” Moody’s Analytics said.
“Service sector output, which makes up more than half of the economy, remained 9.1 percent below the second quarter of 2019. Similarly, private consumption remained 9.2 percent below the second quarter of 2019 as mobility restrictions surpassed domestic demand,” it added.
Image courtesy of Nonie Reyes and Roy Domingo