The elevated number of Covid-19 cases in developing countries like the Philippines poses a threat to their economies such that the International Monetary Fund (IMF) has urged prioritising stemming infections to eventually address both the health and socioeconomic crises inflicted by the pandemic.
The written statement of IMF managing director Kristalina Georgieva issued at the end of the Washington-based lender’s annual meeting last week noted that the real gross domestic product (GDP) of emerging markets and developing economies (EMDEs) was now seen shrinking by 3.3 per cent this year – worse than the IMF’s forecasts in April and June, before recovering with a six per cent growth next year.
“Several EMDEs have benefitted from accommodative global liquidity conditions that have triggered a decline in sovereign yields and a rekindling of portfolio flows to some emerging markets, but others still lack access to markets,” Georgieva said.
Georgieva said “recovery prospects within this group [of EMDEs] are highly uneven”, citing that countries like China or Vietnam, which have been relatively successful thus far in containing the virus, might avoid real contractions this year and expect robust growth next year of seven per cent or more.
On the other hand, Georgieva said: “Other EMDEs, however – including [but not restricted to] India, Brazil, Argentina, the Philippines and Iraq – grapple with high caseloads that cloud the near-term economic outlook.”
The IMF had projected the Philippine economy to contract by a record 8.3 per cent this year as the Covid-19 pandemic soured consumer confidence as well as private investments amid prolonged quarantine restrictions.
As of Friday, the Philippines had the second-highest number of Covid-19 cases in Southeast Asia after Indonesia.
“The priority in countries where infections are high or continue to rise is to slow the transmission,” Georgieva said.
Economic policy should cushion income losses for people and firms, while accommodating the reallocation of resources away from contact-intensive sectors, Georgieva added.
Moving forward, Georgieva said that as economies emerge from the recession, a reassessment of spending priorities would be needed.
PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK