PH’s economic recovery is fragile, think tanks say
Declining consumer support from remittances, deep pandemic scars and still high COVID-19 infections pose risks to the Philippines’ economic recovery, think tanks said Tuesday.
In a report, Pantheon Macroeconomics senior economist for Asia, Miguel Chanco, said the “bump” in remittances sent by Filipinos working and living abroad in the middle of this year “was fading away. “.
Despite the 5.1% year-over-year growth in remittances in August, Chanco said that “the result would have been much lower without a favorable base effect, as inflows fell by 2, 1% month over month, easily reversing the trend 0.4% gain in July and marking the first decline since April. ”
“The drop reinforces our suspicions that the nearly 6% peak in June was one-off, largely as a result of Filipinos overseas transferring more money than usual, to take advantage of the peso’s liquidation. June to July “when the currency broke through the $ 50: 1 mark,” Chanco said.
It hasn’t helped that the number of Filipino Overseas Workers (OFWs) has been declining for five years and further reduced by the COVID-19 pandemic, which sent the global economy collapsing last year. .
“The surge in global oil prices should bode well for transfers from the Middle East, which account for just under a fifth of the total. But the link between oil prices and remittances has deteriorated dramatically, due to the larger decline in the number of OFWs in the Gulf region compared to the rest of the world, ”Chanco said.
In a separate report, Ben May, director of global macroeconomic research at Oxford Economics, said that “among the largest emerging market economies, we see the Philippines, Indonesia and India doing well. particularly badly, in accordance with the opinion of the IMF (International Monetary Fund) that developing Asia will suffer the deepest scars.
Socio-Economic Planning Secretary Karl Kendrick Chua said earlier that while gross domestic product (GDP) will return to growth this year after last year’s worst post-war recession, the return to Pre-pandemic growth potential could be delayed for 10 years, although foreign investment and other reforms pending in Congress could accelerate the recovery.
The strict closures of the past, which have prolonged high unemployment, reduced government revenues, and delayed return to in-person classes among young Filipinos, among other socio-economic ills inflicted by COVID-19, are believed to cost the Philippine economy up to ‘to 41.4 trillion pesos in production losses through 2060, Chua said last month, citing estimates from the national planning agency, the National Authority for Economy and Development (Neda).
Last week, the IMF lowered its GDP growth forecast for 2021 for the Philippines to 3.2%, below the government’s lowered 4-5% target range, as it is expected. that high inflation and the highest unemployment rate in the region persist.
—Ben O. from Vera INQ
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