MANILA - The new variant of the COVID-19 virus is posing a downside risk for the Philippines' economic recovery, an economist said Wednesday.
Michael Ricafort, chief economist of RCBC, said countries worldwide including the Philippines are expected to impose travel bans and some lockdowns, which will "slow down" global economic recovery.
He said if the new variant is detected in the Philippines, the country would likely implement more quarantine restrictions which may drag the local economy's recovery prospects.
RCBC forecasted a 6 to 10 percent contraction in the country's gross domestic product (GDP) this year, and a growth of 6 to 7 percent in 2021.
"At least a 6 percent growth would translate, well for 2021, we would be back to somewhere between 96 to 97 percent of the 2019 pre-COVID levels for the whole economy," Ricafort said.
Election spending to start next year leading up to the 2022 presidential elections may bolster the economy to growth, he said.
The approved 2021 national budget and reforms such as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) can also boost growth, he added.
However, some industries like property and tourism will take a longer time before they can go back to pre-pandemic levels, with some studies estimating these to happen in 3 to 4 years' time.
The Management Association of the Philippines (MAP) agrees that the new coronavirus variant is clouding the country's economic prospects.
It expressed its support for the government's action to prevent the spread of the virus into the country by banning travelers from countries where the new variant has been reported.
"For us, it's necessary because we really don't know the extent of the impact of the new variant," MAP President Francis Lim said.
"So I think the government wanted to err on the side of caution. Of course, it's not easy to impose, to bar the entry of travelers from about 19 countries, including some of the ASEAN brothers like Singapore. Hong Kong is also one of them. South Korea. We do business with them," he added.
The government has implemented wider travel restrictions to prevent the spread of the new coronavirus variant that was first detected in the United Kingdom.
"We just have to take that bitter pill, because if it enters into the Philippines, we still don't know what's the real score, so to speak. Our health sector, our health capacity is not as strong as the others. So we agree with the imposition of that travel ban on those identified countries, otherwise, the economy will suffer," Lim said.
He shared that based on estimates, stricter lockdown protocols like the Modified Enhanced Community Quarantine (MECQ) cost the local economy P1.2 billion a day.
Lim urged the government to quickly acquire vaccines against the deadly disease and inoculate as many people as possible.
"If we do that, then public confidence will be regained. Even if you open up the malls, the stores, the bars, if the public confidence is not back, the effect of the opening up of the economy will not be as envisioned," he said.
Lim added, "Until we inoculate at least 80 percent of our people, we would be hard put in getting back to near normal. Unfortunately, based on what people say, the earliest we can start inoculating people would be the second quarter, and some say towards the end of next year."
MAP is the second private-sector group to warn about the economic implications of the reported new variant.
Earlier, another major local business group, the Philippine Chamber of Commerce of the Philippines (PCCI), said the country's economic recovery will be delayed if the new variant enters the country.