Cautiously climbing the ladder, watching out for snakes

PHILIPPINES - In Brief 02 Jul 2021 by Romeo Bernardo

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The Philippines appears to be on the mend. Yesterday, the Department of Health said the country can now be considered “low-risk” following decreases in active covid19 cases and hospital occupancy at the national level. (Chart 1) Vaccines have also begun to arrive in bulk and inoculation significantly increased to over 220k jabs a day. (Chart 2) On the economic front, new data show more people going back to work in May after the strict lockdown in April (Charts 3, 4), factory activity in the expansion zone (PMI above 50 in June), and mobility rising above pre-lockdown levels (Chart 5), observable too in increased road congestion.We view these gains to be on the modest side and not enough to pin a more hopeful outlook on. Although there appears to be more control now over the health crisis, daily cases have plateaued at 2-3x start-of-year levels and in some regions, infections are rising steeply. (Chart 6) Also, surging covid19 cases in neighboring economies alongside low vaccine coverage (roughly 3.5% of adult population fully vaccinated so far) and much too little work on genome sequencing to detect variants (Table 1) mean that loosening restrictions can only be done in baby steps. The latter in turn implies that business recovery will be tentative as well.Q2 GDP will be released next month (August 10). As we said in our last outlook report forecasting a 4% full year growth rate[1], we expect activity to have shrunk vs Q1. But given last year’s 17% Q2 contraction, we agree with the planning secretary that a headline growth rate of at least 10% is “doable.”CHART 1.Daily infections plateauing at a relatively high levelSource: Johns Hopkins CSSECHART 2.Vaccination is risi...