Rising Omicron cases expected to slow Economic recovery in 2022

Philippine economists believe that the rise of the Omicron variant of COVID-19 will prevent the government from hitting its targeted economic growth. The country’s leaders hope to achieve a 7-9% growth this year. However, as infections increase consumers will likely spend less and save more, according to ING Bank NV.

ING senior economist, Nicholas Mapa, mentions in a research note that consumers are looking to secure booster shots after a “flurry” of spending during the holiday season.

“After putting together a seemingly good [second semester of] 2021, authorities now expect growth to zoom to 7 percent to 9 percent this year, touting vaccination efforts, a sustained march to reopen the economy, revenge spending, the election year, and that lockdowns never bother us anyway,” Mapa said.

“We do however need to remind ourselves that this time last year, growth was expected to jump to 6.5 percent to 7.5 percent due mainly to the same reasons put forward yet again: vaccination, reopening, revenge spending, and the vow to never resort to lockdowns,” he added.

“And although the [fourth quarter] of last year will undoubtedly show a strong print, we are almost certain that the straight-line growth momentum expected for this year will at the very least see some wind knocked out of its sails as Omicron runs roughshod in NCR+,” Mapa said, referring to Metro Manila and nearby provinces.

Recently, the Philippine Statistics Authority (PSA) reported that GDP growth was at 7.1% year-on-year for the third quarter of 2021. The spread of Omicron will be monitored closely as it may likely hamper consumer and business expectations in the short term.

Source: Inquirer