August 13, 2021
Inter-Agency Task Force spokesperson Harry Roque said the travel ban on India, Pakistan, Bangladesh, Sri Lanka, Nepal, United Arab Emirates, Oman, Thailand, Malaysia and Indonesia will be in place until Aug. 31. The ban was supposed to lapse on July 31, but the government has issued several extensions. The country has detected at least 627 cases of the Delta variant.
Laguna, Iloilo City, and Cagayan de Oro City will ease from a hard lockdown to a modified enhanced community quarantine from Aug. 16 to 31, the Inter-Agency Task Force announced. he IATF also placed the following areas under MECQ from Aug. 16 to 31: Apayao; Ilocos Norte; Bulacan; Cavite, Lucena City, and Rizal in Region 4-A for Luzon; and Aklan, and Iloilo Province in Region 6, and Lapu-Lapu City, Mandaue City, and Cebu City in Region 7 for the Visayas.
The current account deficit is likely to widen starting in 2022, pressing home the need for reforms to attract more foreign direct investment (FDI) rather than more transitory forms of inflows. Fitch Solutions Country Risk and Industry Research said it expects the current account to remain in surplus this year equivalent to 1.3% of gross domestic product (GDP), much less than the 3.6% surplus last year. The thinning of the surplus this year will be due to the moderate recovery in import demand. The central bank expects the current to post a $10-billion surplus this year, equivalent to 2.5% of GDP. The current account was in surplus by $12.979 billion in 2020, a turnaround from the $3.047-billion deficit in 2019.
AMRO’s economist for the Philippines Zhiwen Jiao said the economy’s 11.8% growth in the second quarter signaled signs of recovery but the momentum may have slowed due to the resurgence in coronavirus cases and renewed lockdowns. The regional macroeconomic surveillance organization slashed its 2021 growth projection for the Philippines to 6.4% in June from the previous 6.9% forecast in March. IHS Markit Asia Pacific Chief Economist Rajiv Biswas also warned that the tighter restrictions and a lack of adequate vaccine supplies will slow down the Philippines’ recovery momentum over the near term.
The central bank on Thursday (Aug. 12) kept key interest rate at historic lows despite fears of an uptick in inflation, saying the pandemic-ravaged Philippine economy needs more help from cheap funds to get back on its feet. Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the Monetary Board decided to maintain the interest rate on its overnight borrowing rate—which banks use as basis for their loan pricing decisions—at 2 percent. The interest rates on the overnight deposit and lending facilities were likewise kept at 1.5 percent and 2.5 percent, respectively.
To minimize the pandemic-induced economic scarring, the Philippines needed to tap its available fiscal space to ramp up stimulus spending amid the threat posed on recovery by the more contagious COVID-19 strain. With easing inflation and the Philippines’ gross domestic product (GDP) still about 10-percent smaller than pre pandemic levels, Capital Economics senior Asia economist Gareth Leather expects the Bangko Sentral ng Pilipinas (BSP) to ease interest rates to aid in economic recovery. He added that the support extended by the Philippines and Indonesia to sectors badly hit by the COVID-19 crisis was “not aggressive enough given the size of the shock that these economies have experienced.”
Secretary Carlito Galvez welcomed the arrival of 2 million doses of government-procured Sinovac vaccines, at 7:20 p.m. at the Bay 49 of the Ninoy Aquino International Airport (NAIA) Terminal 2 in Parañaque City. Half of the newly delivered vaccines will be given to the NCR Plus 8 bubble, and the rest will go to high-risk provinces nationwide, he said. As the government is expecting more deliveries within this month, Galvez assured an equitable distribution of vaccines nationwide. But, in the meantime, the government will focus the vaccination program on the areas that are high-risks to Covid-19 infections, he said.
The Department of Trade and Industry (DTI) is putting off increases on the suggested retail price (SRP) of basic goods with Metro Manila and other parts of the country under strict lockdown. The DTI has been holding off price adjustments amid the ongoing coronavirus pandemic. SRPs of basic goods have not been changed since September 2019.
The country received two million more doses of the COVID-19 vaccine developed by Chinese firm Sinovac Biotech. On Wednesday, the country also secured fresh vaccine deliveries totaling over 900,000 doses — a batch of 813,150 Pfizer shots and 100,000 doses of the Hayat-Vax vaccine donated by the United Arab Emirates.
The country has detected 177 new cases of the highly contagious Delta variant of the coronavirus, raising the total confirmed infections to 627, the Department of Health reported on Thursday. The DOH said the new Delta variant cases include 144 local infections, three returning Filipinos, and 30 that are still for verification. Of the new cases, 173 were tagged as recovered, one died, while the status of the other three cases are still being verified.
Two pillars of the industries, electronics and semiconductors and the information technology-business process management (IT-BPM), are poised to underpin the growth of exports this year. Secretary Ramon Lopez of the Department of Trade and Industry (DTI) yesterday said for the full-year exports, the target is to grow 15 percent, based on the average growth rate for the year of 21 percent to $36 billion from $20\9.7 billion in the same period in 2020. Growth will be led by electronics which accounts for more than 50 percent of the total pie; at $20.27 billion, up 18.5 percent from $17 billion a year ago.
Trade Secretary Ramon Lopez said last 11 August that moving to MECQ from the strictest quarantine restrictions would allow the government to better manage the economy with more business activities and people back to work. He said the DTI has proposed for the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) to include the number of severe and critical cases in deciding the quarantine classifications to be imposed. He said the number of severe and critical cases should also be monitored, whether these are going up or down.
Fitch Solutions said it cut its 2021 gross domestic product (GDP) growth forecast for the Philippines to 4.2% from the 5.3% penciled in last May, citing the reimposition of a hard lockdown in Metro Manila and the spread of the Delta variant. The revised forecast is lower than the government’s 6-7% GDP growth target this year. The think tank’s downgraded forecast came a day after the statistics agency reported the Philippine economy exited recession after GDP grew by 11.8% in the second quarter.
The government is expecting the economy to grow by at least 7.4% under a “no-lockdown” scenario in 2022, but unemployment and poverty rates will likely remain high, the Finance department said. The government set a 7-9% GDP growth target for 2022, which the Department of Finance (DoF) said will be achieved “with proper management of risks brought about by the COVID-19 pandemic and a calibrated gradual reopening of the economy but with strict adherence to the minimum public health standards.” Even with a generally positive outlook on economic growth, the DoF said unemployment and poverty remain to be major challenges next year.
Trade Secretary Ramon Lopez said in a virtual event on Wednesday that the 11.8-percent economic growth in the second quarter—the first uptick in over a year—will provide the country momentum for the rest of 2021. Lopez is banking on the information technology-business process management (IT-BPM) and export industries in driving the economy towards recovery. Last year, the employment in the IT-BPM industry grew by 1.8 percent to 1.32 million while revenues rose by 1.4 percent to $26.7 billion.
The research arm of the Fitch group said it now projects the country to grow by 4.2 percent for the year, down from its earlier projection of 5.3 percent, citing the continued disruptions to output from rising Covid-19 cases. Fitch Solutions also said the locking down of Metro Manila in August and the heightened threat from the more infectious Delta variant has led it to lower its expectations for domestic activity through the remaining months of the year. The new projection came amid the Philippine Statistics Authority’s (PSA) announcement that the country’s gross domestic product in the second quarter of the year hit 11.8 percent, effectively ending the recession in the country.
The country’s unemployment rate may remain “elevated” next year at between 6.7 and 7.6 percent, the Department of Finance (DOF) said. This is lower compared to the preliminary annual unemployment rate in 2020 recorded at 10.3 percent, accounting for 4.5 million unemployed Filipinos in the labor force. According to the Philippine Statistics Authority, the unemployment rate recorded in 2020 is the highest so far since April 2005. In 2019, the unemployment rate was posted at 5.1 percent.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed soured loans climbed 73.9% to P482.991 billion in June from P277.806 billion in the same month in 2020. Bad loans also inched up by 0.7% from the P479.481 billion logged in May. Despite the increase in bad loans held by lenders, the NPL ratio slightly eased to 4.48% from the 13-year high of 4.49% in May. However, it was still much higher than the 2.57% seen in June 2020. BSP officials earlier said they expect the NPL ratio to hit “a little over 5%” by end-2021.
Socioeconomic Planning Secretary Karl Kendrick T. Chua said the government’s Covid-19 vaccination program remains on track. Chua said a total of 38.6 million doses have arrived in the country between February 28 to August 8, 2021. This has allowed the government to continue its vaccination drive. As of August 8, Chua said a total of 24.5 million doses have been administered. This consists of 13.1 million receiving their first dose and 11.4 million, their second dose.
Although the country technically exited from the pandemic-induced recession with the 11.8-percent GDP growth posted in the second quarter, lawmakers said it would take a lot of effort for all sectors to sustain that growth, given the impact of the latest, still ongoing strict lockdowns in the major economic hubs. Still, leaders of the House of Representatives said the Philippines is still in the game for 7-percent GDP growth this year. However, House Committee on Ways and Means Chairman Joey Sarte Salceda said government should continue implement faster rollout of Covid-19 vaccine doses and mitigating measures against the Delta variant to sustain recovery on the second half of 2021.
Foreign direct investments (FDI) in May hit $429 million, declining by 25.4 percent from the $575 million in the same month last year. Despite the decline in May, the cumulative FDI level remained higher by 37.8 percent at $3.5 billion net inflows in the first five months of the year from $2.5 billion net inflows in the same period last year. The BSP said this is due largely to overall improvements across all the subsectors of FDI during the year.
National Statistician Dennis Mapa said the second quarter growth is the second highest growth of the Philippine economy on a quarterly basis, since the fourth quarter of 1988 when the economy grew 12 percent. The economy churned in a value of P488.83 billion for the period, up from P370.35 billion in the second quarter of 2020, according to Mapa. On a per sector basis, the industry and services grew 20.8 percent and 9.6 percent, respectively, while the agriculture, forestry and fishing contracted by 0.1 percent. Per capita GDP grew 10.3 percent, a reversal from last year’s 18.1 percent contraction, while per capita GNI grew 5.2 percent compared to an 18.8 percent contraction last year