MANILA - The Philippines’ recovery to its pre-pandemic economic output may be delayed to 2023, an analyst said on Wednesday as the world grappled with the possible effects of the Omicron variant of COVID-19.
Jon Canto, acting managing partner at global management consulting firm McKinsey and Company said they are looking at multiple scenarios, with the best outcome being a return to pre-pandemic levels by the third quarter of 2022.
But Canto also warned that Omicron may delay recovery to 2023.
“If the virus and new variants take a more longer [sic] hold, that could extend probably to [the] first quarter of 2023,” Canto said during the
Arangkada Philippines Forum 2021 hosted by the Joint Foreign Chambers of the Philippines.
Johanna Chua, Chief Economist for Asia at Citigroup Hong Kong meanwhile noted that the Philippines was a laggard in the region as India and Indonesia are already set to return to pre-pandemic levels of output this year, while China already achieved this last year.
“Basically that means we’ve had almost 2 years of permanent income loss and output, which means a lot of people will come out of this worse off than where they were pre-COVID,” Chua said.
The European Chamber of Commerce of the Philippines also said that a return to pre-pandemic levels was not enough to make the country more attractive to foreign investors.
“We expect recovery and growth will come, but recovery to just old normal? There must be a better normal to attract substantial investment and trade,” said ECCP president Lars Wittig said the Philippines.
The Bangko Sentral ng Pilipinas meanwhile struck a more optimistic tone saying the latest GDP growth suggests that economic rebound is underway.
BSP Governor Benjamin Diokno said the country’s macroeconomic fundamentals remain sound and strong growth is expected in 2022.
Diokno however admitted that while economic activity is improving, the recovery remained under threat from the emergence of new variants as long as a large part of the population was still unvaccinated.
“Nevertheless, the sustained implementation of targeted fiscal initiatives, as well as the acceleration of the vaccination program, should help boost market confidence and economic recovery,” Diokno said.
He also repeated the BSP’s commitment that they will maintain accommodative monetary policy settings for as long as possible to support the recovery.