PH ranks last in UK think tank’s Asia Pacific economic scarring scorecard

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Metro Manila (CNN Philippines, July 27) — The Philippines finished last in the UK think tank’s scorecard on economic scarring — or permanent losses to economic output — assessing the Asia Pacific region.

In a research briefing published Tuesday, Oxford Economics gave the Philippines an overall scarring score of -1.2. It expects the country to “experience the largest declines in output relative to prepandemic trend growth by 2025,” adding its gross domestic product level could be 8-10% lower than forecasts prior to the COVID-19 pandemic.

The Philippines shares this projection with second lowest placer India, who was assigned a score of -1.0. The South Asian giant has recently been pummeled by a devastating surge in coronavirus infections driven by the Delta variant.

The think tank also noted how both countries struggled to contain outbreaks since the global health crisis began, along with their “meagre” fiscal response considering how strict their lockdowns were.

Economists have raised concerns about the Philippines’ fiscal response amid the coronavirus crisis, noting the government fell short in softening the economic downturn’s impact.

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“This has led us to lower our investment and employment forecasts significantly,” added Oxford Economics. “Indeed, investment in the Philippines was still 25% below pre-Covid 19 levels in Q1 2021 and the unemployment rate in Q2 was nearly double what it was before the pandemic.”

Oxford Economics takes into account cyclical and structural factors split into five categories for its long-term economic scarring scorecard: decline in activity growth in the crisis year, recovery of potential gross domestic product drivers, health-related scarring, structure of the economy, and policy offsets.

The Philippines remains in recession in 2021, with GDP plunging 4.2% in the first quarter of the year. Still, economic managers remain confident growth will fall within the downscaled 6-7% target band this year.