First Metro, economist see recovery continuing despite omicron surge

Warren de Guzman, ABS-CBN News

Posted at Jan 11 2022 03:48 PM | Updated as of Jan 11 2022 05:04 PM

MANILA - Metrobank’s investment arm said Tuesday it remains optimistic about the Philippines’ growth despite the ongoing surge in COVID-19 infections.

First Metro Investment Corporation (FMIC) said while daily infection tallies are breaking records, the economy remains open.

“We are mobile, even if we are already at 33k. That is really the result of our vaccination rate of 50 percent," said Cristina Ulang, FMIC’s head of research.

Ulang said she expects economic recovery to continue this year, even with the omicron surge, as vaccination continues. 

“We will be able to reopen in a bigger way once we have a booster shot.” 

Business groups have been calling on the government to refrain from further tightening mobility restrictions in Metro Manila despite the surge, saying an escalation to Alert Level 4 would weigh down businesses. 

Economist Victor Abola from the University of Asia and the Pacific also said the experience of other countries with omicron shows that it is not as severe as previous variants.

“Infection rate is quite fast, because it is really very transmissible. However it is less deadly,” Abola said. 

“The experts say, based on South Africa and other areas, omicron will be a matter of weeks not months,” Abola added. 
 
Ulang forecasts the PSEI to hit between 7,900 and 8,100 this year, as corporate earnings grow by as much as 35 percent. 

Abola meanwhile said he expects the Philippine economy to grow 6 to 7 percent this year, which is below the government’s own forecast of 7 to 9 percent, but higher than the expected growth for 2021 of between 5 and 5.5 percent. 

Inflation is also expected to ease 3.7 percent this year, from over 4 percent last year, Abola said. 

This he says will allow the Philippine Central Bank to keep key interest rates at record lows, which in turn should continue providing support for the economic recovery.

FMIC Chairman Francisco Sebastian meanwhile said that foreign investors will be playing a bigger role this year, with the government passing amendments to allow offshore capital to play a bigger role in retail and other sectors.

Sebastian noted that net inflows of foreign direct investments were already at $8.1 billion as of October last year. 

“In the past 5 or 7 years, FDI is about 1 to 2 billion USD a year. So it is running about 7 times of what it was before. It is FDIs that will bring us jobs, give us economic growth.” 

President Rodrigo Duterte signed into law an amendment to the Retail Trade Liberalization Act, lowering the capital requirement for foreign retailers to enter the Philippines, and FMIC expects this will generate more FDI in the near future.

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