United Kingdom think tank Oxford Economics said the Philippines is at the bottom of its economic scarring scorecard as the country is expected to experience large economic loss due to the decline in investments and elevated unemployment rates.
In a research briefing, Oxford Economics said the Philippines' scarring score was -1.2, the lowest recorded among the Asia Pacific region.
Slightly behind the Philippines was India with a scarring score of -1.0.
Oxford said the economic scarring scorecard looked at cyclical and structural indicators.
These are arranged into five categories which include decline in activity in the crisis year; recovery of potential gross domestic product drivers; health-related scarring; structure of economy; and policy offsets.
"We expect a surge in world trade and booming electronics exports to lead to higher investment and productivity in Taiwan and Vietnam. In contrast, we expect India and the Philippines to experience especially large losses given sharp falls in investment and higher unemployment rates," said Oxford.
Oxford said that both India and the Philippines "struggled to contain outbreaks since the pandemic took hold."
"At the same time, the fiscal response has been meagre in both India and the Philippines, given the stringency of their lockdowns," it said.
"This has led us to lower our investment and employment forecasts significantly. Indeed, investment in the Philippines was still 25 percent below pre-Covid 19 (coronavirus disease 2019) levels in Q1 [first quarter] 2021 and the unemployment rate in Q2 [second quarter] was nearly double what it was before the pandemic," it added.
Capital formation declined by 18.3 percent in the first quarter while the unemployment rate settled at 7.1 percent.
Latest data from the Philippine Statistics Authority showed that the unemployment rate was at 7.7 percent as of May.
"Our scorecard supports our forecasts that India and the Philippines will experience the largest declines in output relative to pre-pandemic trend growth by 2025," said Oxford Economics.
The Philippines has been under different levels of quarantine measures since mid-March last year causing the economy to contract by 9.6 percent in 2020, the steepest decline recorded since after World War 2.
In the first quarter of the year, the economy continued to contract by 4.2 percent.
The government, however, is optimistic that the economy would grow by 6 to 7 percent this year.
Source: The Manila Times