PH economy seen to survive Omicron surge 

The Philippines is expected to survive the latest surge of infections due to the Omicron variant, with the economy still seen growing and returning to its pre-pandemic trajectory this year, according to a report by Philippine Star.

In a briefing yesterday, First Metro Investment Corp., the investment banking arm of the Metrobank Group, said it remains optimistic of green shoots of recovery this 2022 after dealing with the pandemic in the last two years.

This, even as the country is experiencing a third wave of infections amid the more transmissible Omicron variant, with record-high daily cases in the past days.

FMIC head of research Cristina Ulang said the economy remains open even with a soaring infection rate because of better vaccination coverage as compared to the previous COVID-19 waves.

“We are mobile and that’s really the result of a vaccination rate of 50 percent. The economy is able to function, our factories are open, people are able to work,” Ulang said.

“We have the vaccination and we are still able to open, notwithstanding the 33,000 daily infection rate. That is the big difference that we are seeing that is benefiting the economy,” she said.

University of Asia and the Pacific economist Victor Abola concurred that the Omicron variant would not put much dent on the economy.

Citing evidence from other countries, Abola said infection rate is quite fast because it is more transmissible, but the variant is less deadly.

“Experts say Omicron is like a matter of weeks, not months. We can open much faster than what our authorities think,” he said.

In its outlook, FMIC expects the economy to grow by six to seven percent this year, allowing the country to return to its pre-pandemic level.

FMIC president Jose Patricio Dumlao said growth momentum in the past quarters likely spilled over given further economic reopening and easing mobility restrictions.

Dumlao maintained that growth would be driven by sustained domestic demand, easing inflation, election expenditures, and accelerated government spending on infrastructure projects.

“Business and consumer confidence are also cautiously positive given wider availability of vaccines and relaxation of lockdowns, quarantine measures and mobility restrictions,” Dumlao said.

“Our external position remained robust, supported by manageable external debt, steady US dollar inflows from remittances and BPOs, and high gross international reserves,” he said.

Inflation, on the other hand, is expected to decelerate to a range of 3.5 to 3.7 percent from last year’s 4.5 percent. Such a rate will prompt the central bank to keep policy rates unchanged.

FMIC is projecting the peso will continue to depreciate slightly because of the strength of the US dollar and a widening trade deficit. It is seen to trade within 51-52 to a dollar.

In the debt market, FMIC said Phl bonds would remain attractive to issuers as they continue to ramp up their capital expenditures for expansion and as liquidity remains high.

It added that the Philippine Stock Exchange index (PSEi) can potentially reach 7,900-8,100 this year with a price earnings ratio of 16.9x.