Positive Health and Economic Data Point to a Strong Rebound
The phrase “when it rains, it pours” has taken a positive meaning in current developments in the Philippines. Our Covid-19 data are improving significantly while recent economic figures suggest the business reopening in the Philippines is a success. All these numbers point to a healthier nation and a robust economy in the coming months.
A healthy and more mobile population means wider participation in the economy that we are trying to open up. And as consumers spend more, we can expect an increasing number of small and medium scale entrepreneurs to re-surface and make their own contribution to the rebounding economy.
Increased economic activities in the Philippines are a result of declining Covid-19 cases. We are now the envy perhaps of many nations following our success in containing the Covid-19 infections. Daily cases in the Philippines have significantly fallen to below 400 on the average last week. Active cases dropped to below 12,000 as of last Friday.
Metro Manila, once the epicenter of the pandemic, averaged 105 new Covid-19 cases a day from December 1 to 7, 17 percent down from the 126 cases a day from November 24 to 30. All 16 cities and one municipality are now classified as either very low risk or low risk for infection. The National Capital Region reported a reproduction number of 0.34 in the second week of December, from 0.3 recorded from November 29 to December 5. The reproduction number refers to the number of people who can be infected by one case. A reproduction number that is below 1 indicates that transmission of the virus is slowing down.
These declining numbers are very impressive when we compare them to what is happening in Europe, where the daily Covid-19 cases are over 10,000 in many countries. The low Philippine figures have increased people mobility and allowed business establishments to accommodate more people, as opposed to Europe, which ordered the mask mandate back and restricted the movement of their population. Filipinos are luckier in a sense because we can spend and enjoy the Christmas season more freely.
Our positive Covid-19 data have given the economy more room to maneuver and opportunities to create jobs. Some data emerging in December are giving us a clear picture of how the economy is performing in the fourth quarter. Exports in the first 10 months jumped 16.1 percent year-on-year to $62.10 billion, per the data released by the Philippine Statistics Authority last week.
Export-oriented companies were able to operate at 100 percent capacity amid the enhanced community quarantine and stricter alert levels. As a result, many of our exporters fulfilled their commitments to the global market despite logistical challenges here and in their foreign market.
Philippine imports, on the other hand, are rebounding. Imports in the first 10 months reached $95.31 billion, up nearly 30 percent from $73.48 billion a year earlier. More shipments from abroad will translate into increased factory production and exports in the coming months.
Factory output, meanwhile, climbed 24.7 percent in October from a year ago on higher production of fabricated metal products, per separate data from the PSA. The growth in the volume of product index in October this year was slower than the 123.1-percent rise in September, but it marked a reversal of the 25.4-percent drop recorded in October last year.
These emerging positive data are making our economic managers more optimistic on the prospects of the economy. Bangko Sentral ng Pilipinas Governor Benjamin Diokno now expects the full-year economic growth to exceed the target range of 4 percent to 5 percent, with his forecast of the gross domestic product expanding by about 7 percent in the fourth quarter.
Governor Diokno has confidently predicted a GDP growth rate of around 7 percent in the fourth quarter with the easing of quarantine restrictions, faster vaccination rollout, improved mobility, and the resulting increased economic activities in the three-month period.
His optimism is not unfounded. Even the World Bank raised its 2021 growth forecast for the Philippines to 5.3 percent from its previous estimate of 4.3 percent after the 7.1-percent third-quarter expansion that topped market expectations despite the Covid-19 pandemic. The financial institution recognized the economic expansion in the third quarter despite the implementation of several localized lockdowns.
I share the optimism of Governor Diokno and the World Bank. The expanding vaccination coverage in the Philippines, better Covid-19 numbers, and increased business activities are indications of a firmer economic recovery.