Philippines Faces Slow Economic Recovery Amid Delta Variant and Sluggish Vaccination Campaign

The Philippines is facing a slow economic recovery due to its sluggish vaccination campaign and the emergence of more infectious COVID-19 variants, according to Fitch Solutions.

Fitch Solutions cut its 2021 GDP growth forecast for the Philippines to 4.2% from 5.3%, citing the reimposition of hard lockdowns in Metro Manila and the spread of the Delta variant.

Despite exiting recession with a second quarter GDP growth of 11.8%, financial institutions expect economic growth below target this year due to weak private consumption and potential extensions of strict quarantine measures.

Monetary policies will continue to support the economy, but costly mobility restrictions may be necessary if new variants cause future waves of infection.

The Philippines' recovery prospects remain dim despite exiting recession in Q2 2021, with economists projecting growth at 10% or above due to last year's low base.