MANILA - The Philippines is likely to experience slower economic recovery compared to its Asian peers, due to the slow recovery of services sector which is a major contributor to its growth, an economist said Tuesday.
Noelan Arbis, economist at HSBC, told the ANC Market Edge that the Philippines needs more fiscal stimulus and to improve mobility in order to have robust recovery.
"The pandemic has hit the services sector far worse than other sectors of the economy like manufacturing. Like China, it was the manufacturing sector that recovered first and foremost, then it was the consumers and services sector that recovered later on," Arbis said.
He noted that the country's fiscal stimulus packages, equal to 3 to 4 percent of the GDP, should be raised at par with neighboring countries.
Among the Philippines' fiscal packages are the Bayanihan to Recover as One Act or Bayanihan 2, and the anticipated bill on Bayanihan to Rebuild as One or Bayanihan 3.
"Unfortunately, the Philippines is a service-oriented economy. By that nature, lockdown and movement restrictions remain in place, the services sector is likely to be one of the last to recover particularly in some key industries like travel, leisure, and restaurants," he added.
He said the country's gross domestic product (GDP) is expected to grow by 6.5 percent this year, before growing again by 6.5 percent next year coming from a stronger base this year.
No more BSP rate cuts
The HSBC economist said there would be no more policy rate cuts coming from the Bangko Sentral ng Pilipinas (BSP) this year, as additional liquidity is "not needed".
Arbis said the BSP "has done its part" in keeping the economy afloat through rate cuts.