Companies doing business in the Philippines are assessing the implications of COVID-19 on the country’s economy. They are likely to find that three shifts introduced during the pandemic will persist into the future: economic activity will be digitally enabled but also hyperlocal; the wealth gap is widening, and new consumer segments have emerged; and the pandemic is likely to result in a greener and more sustainable economy.
Meanwhile, the consensus view shows the Philippines economy recovering by the fourth quarter of 2022 under a muted scenario, even taking the Omicron wave into account (Exhibit 1).
The economic outlook varies by industry; companies in the consumer and retail sector are likely to see a muted recovery through 2022 (Exhibit 2), but consumer demand for essentials remains strong, while some discretionary spending is likely to rebound in line with other countries in the region. The consumer behaviors learned during the pandemic—digital migration, value hunting, and the homebody economy—may stick.
The travel and hospitality sectors are poised to surpass 2019 growth in 2022, although headwinds could stall tourism recovery until 2024. In the interim, companies can take targeted actions to reinvent themselves and grow out of the pandemic. In financial services, the banking sector could take up to five years to recover from its 2020 drop in return on equity (Exhibit 3). Among Filipino consumers, active use of digital banking and e-wallet services has increased significantly.
The healthcare sector is expected to grow through 2022, while pharmaceutical manufacturing is likely to remain steady. Certain consumer behaviors—digital-care adoption, focus on preventive care and wellness, and interest in value for the money—are likely to stick after the pandemic.
Likewise, the energy and power sector is expected to expand through 2022. Finally, the outlooks for IT business process outsourcing (BPO) and remittances from overseas Filipino workers, a resilient lifeline for the Philippine economy, remain strong (Exhibit 4).