Further economic reopening during last year’s Christmas holidays likely lifted growth in the Philippines last year, but the Covid-19 infection surge at the start of 2022 is seen tempering gross domestic product (GDP) expansion, investment banking giant Goldman Sachs’ updated forecasts showed.

In a January 8 report, Goldman Sachs Economics Research noted that “the Omicron variant of Covid-19 has begun spreading in most Asia-Pacific economies”.

“Given the much higher infectivity of this strain, an ‘Omicron wave’ is likely across much of the region in coming weeks,” Goldman Sachs warned.

“While Omicron appears to cause less severe disease than earlier variants, much higher infection rates could still lead to a meaningful rise in hospitalisations in coming weeks. This in turn may prompt at least a modest increase in restrictions across the region, as we are starting to see in India, Hong Kong and the Philippines, for example,” Goldman Sachs said.

As Covid-19 cases surged, Metro Manila, four surrounding provinces, and other areas, which accounted for about half of the economy had been placed under stricter alert level 3 restrictions until January 15. The economic team on January 7 said the move to one-notch higher alert level will cost three billion pesos ($58.4 million) in output losses per week.

Goldman Sachs noted that as Omicron community transmission was likely already present in the Philippines given the current pick-up in infections, local executives in Metro Manila imposed lockdowns for those still unvaccinated against Covid-19.

In a separate January 7 report, Goldman Sachs said “Indonesia and the Philippines are lagging in terms of regional vaccination progress” with only 61 per cent and 53 per cent, respectively, of their populations inoculated with at least one dose of the Covid-19 vaccine as of last week.

As such, Goldman Sachs cut its 2022 GDP growth projection for the Philippines to 7.1 per cent from 7.3 per cent previously. Its forecast remained within the government’s seven-to-nine per cent growth target.

Next to Vietnam’s 9.5 per cent and India’s nine per cent projected growth rates this year, the Philippines was expected by Goldman Sachs to exceed Malaysia’s 6.5 per cent, Indonesia’s 5.1 per cent, Singapore’s five per cent, Thailand’s 3.4 per cent, Taiwan’s 3.2 per cent, South Korea’s 3.1 per cent, and Hong Kong’s 2.6 per cent.

Goldman Sachs forecasted GDP in the first quarter to grow 6.6 per cent year-on-year, down from 6.9 per cent previously.

Quarter-on-quarter, Goldman Sachs estimated first-quarter GDP to be 0.7 per cent bigger than economic output during the fourth quarter of 2021, a slower increase compared to the previous expectation of 1.4 per cent growth.

Goldman Sachs was nonetheless more optimistic of second-quarter growth, slightly raising its forecast to 9.5 per cent year-on-year from 9.4 per cent previously.

For Goldman Sachs, 2021 likely ended with 5.1 per cent full-year GDP growth, a faster expansion than its earlier forecast of 4.9 per cent.

It projected the fourth quarter of last year to have grown by 5.6 per cent year-on-year, more optimistic than the previous 5.1 per cent projection.

This came on the back of expectations that fourth-quarter 2021 output rose 1.7 per cent compared to the third quarter’s, also an improvement from the prior 1.2 per cent quarter-on-quarter growth forecast.

Goldman Sachs said it jacked up growth estimates for the fourth quarter of 2021 due to “stronger tracking data and/or mobility in Indonesia, Malaysia and Philippines”.

PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK