The Philippines is seen emerging as the third fastest growing economy in Asia Pacific this year but the scars caused by the COVID-19 pandemic will likely remain for a long time.
In its latest Asia Pacific Outlook titled “Risks Shift Toward Policy,” Moody’s Analytics upgraded the gross domestic product (GDP) growth of the Philippines to 6.2 percent this year instead of 5.6 percent, making it the third fastest growing economy after India’s 8.7 percent and Vietnam’s 6.5 percent.
This is lower than the seven to nine percent target set by Philippine economic managers for this year.
The country emerged from recession with output growth of 5.6 percent last year after shrinking by 9.6 percent in 2020 due to the impact of strict COVID-19 lockdowns.
Moody’s Analytics said the current stanza brings COVID-19 back into the picture with the Omicron variant after a strong fourth quarter.
“Available data show that Indonesia, Malaysia, the Philippines, Singapore and Vietnam all posted strong fourth-quarter growth, with real GDP in all but Malaysia and the Philippines now above pre-pandemic levels,” it said.
On the other hand, S&P Global Ratings Asian economist Vince Conti said the scars brought about by the global health crisis is likely to linger, making it difficult for the Philippines to recoup the economic losses.
At the height of the COVID-19 lockdowns in 2020, Conti explained the Philippines fell 20 percent below where its economy should have been without the pandemic.
After rebounding strongly with three consecutive quarters of output growth in 2021, Conti pointed out the Philippine is still 14 percent below where it should be without the pandemic.
“So there’s a lot of slack in the economy in that sense. However, we do also recognize that some of this scarring might be permanent in the sense that the level of GDP might never might never catch up to the path that it was taking without the pandemic,” Conti added.