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PH Economy Shows Signs of Slow Recovery From Pandemic’s Impact

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Key Points

  • The Philippines may have survived the COVID-19 pandemic’s worst impact but recovery seems slower than how its peers fare as infections remain high, think tanks based in the UK said on Wednesday.
  • To recall, on August 4 to 18, the government put back Metro Manila and four neighboring provinces—which accounted for half of the economic output—under a more stringent modified enhanced community quarantine as health care workers sought a “time-out” after an increase in COVID-19 cases within these areas when the economy slowly opened up.
  • Oxford Economics reported that merchandise exports in the Philippines plummeted by 30 percent over the entire second quarter.
  • Visit The Financial Today’s homepage for more stories.

The Philippines may have survived the COVID-19 pandemic’s worst impact but recovery seems slower than how its peers fare as infections remain high, think tanks based in the UK said on Wednesday.

“The economy is likely past the worst. But things have been slow to bounce back. Manufacturing volumes were still down around 20 percent year-on-year at the end of the [second] quarter. In contrast, manufacturing output returned to growth in June in several regional economies,” London-based Capital Economics said in a report.

“Meanwhile, the government has failed to contain the virus and daily new infections are the highest in the region outside of India. Reflecting this, Google mobility data show that while the movement of people started to recover in June, activity remains very depressed and is recovering much slower than elsewhere,” Capital Economics added.

To recall, on August 4 to 18, the government put back Metro Manila and four neighboring provinces—which accounted for half of the economic output—under a more stringent modified enhanced community quarantine as health care workers sought a “time-out” after an increase in COVID-19 cases within these areas when the economy slowly opened up.

Three-fourths of economic activity was resumed in June as the longest and most strict COVID-19 lockdown in the region forced the nation into recession in the first half, contracting by an average of 9 percent from January to June.

The number of COVID-19 cases in the Philippines has been the highest in Southeast Asia to date.

“The central bank in the Philippines (Bangko Sentral ng Pilipinas) left its main policy rate on hold at 2.25 percent in August, in what it described as a ‘prudent pause.’ We disagree that there is anything prudent about delaying further easing given the state of the economy, and we expect the [BSP] to continue cutting before long,” according to Capital Economics.

Separately, UK-based Oxford Economics also noted on Wednesday that “broad lockdowns have constrained exports,” in the Philippines and India.

“In April, when lockdowns were intense in both countries, goods exports were lower by 60 percent [in India] and 50 percent year-on-year [in the Philippines],” Oxford Economics said.

Oxford Economics reported that merchandise exports in the Philippines plummeted by 30 percent over the entire second quarter.

Moving forward, Oxford Economics said they “expect overall global demand for Asian exports to improve in the rest of 2020 and into 2021” as “reliance on commodity and energy exports should be less of a handicap than it was in the first half.”

However, “because new outbreaks of COVID-19 remain a key risk, supply constraints may continue hampering exports in countries that are particularly vulnerable in this regard,” according to Oxford Economics.

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