Hongkong and Shanghai Banking Corp. said Tuesday the faster pace of COVID-19 vaccination rollout in the Philippines will help the economy to rebound by 6.3 percent this year from the 9.6-percent contraction in 2020.
Fan Cheuk Wan, chief investment officer for Asia, Private Banking and Wealth Management, HSBC, said in an online briefing the Philippine economy continued to face headwinds from COVID-19 and the slow pace of vaccinations.
Fan said the recent acceleration of vaccinations with improved supplies might facilitate economic reopening in the coming months.
"We expect fiscal policy support, better containment of the virus and wider vaccine rollout will support the GDP to rebound from -9.5 percent in 2020 to 6.3 percent in 2021 and 6.5 percent in 2022," Fan said.
Latest data showed the government administered over 8 million doses of vaccines, including 6 million first doses, slowly making progress in its target to inoculate up to 70 million of its population of over 110 million.
Fan said the recent normalization of inflation on falling food prices should ease policy tightening concerns.
"We think limited demand-side pressures will keep inflation relatively benign in the second half of the year. We expect the Bangko Sentral ng Pilipinas will keep policy rate on hold at 2 percent until the first rate hike in first quarter of 2022," Fan said.
"The current historically low nominal and real interest rates should be accommodative enough to support the economic recovery,” Fan said.