World economic rebound projected in 2021

A few days ago, I had a conversation with an old friend of mine, a very astute and brilliant financial analyst who used to do consultancy work for the World Bank. He is totally confident that the world economy will start to show signs of a rebound by early next year, saying that his projection is based on several factors, foremost of which are the promising developments in testing therapies to cure COVID-19 infections and, more importantly, the development of a vaccine that would offer significant protection against the virus.

According to the interim Economic Outlook report recently released by the Organization for Economic Cooperation and Development, global GDP could return to pre-pandemic levels by 2021, most likely by the third quarter. Deutsche Bank is even more optimistic in its outlook, saying global economic growth will return to pre-COVID-19 levels by mid-2021 – “significantly faster than we envisioned in the gloomy days of early May when we last updated our overall world outlook,” said its global head of economic research.

Even JP Morgan acknowledges that the global economy is starting to get back up. While cautioning that there could be more headwinds, JP Morgan CEO in Europe, the Middle East and Africa Viswas Raghavan say, “The most obvious tailwind is a vaccine” which is “probably the single biggest catalyst” for economic recovery. The sooner the vaccine comes, the better, he also said, since it will take time for a mass rollout of a vaccine.

A recent survey among over 600 American CEOs revealed that four out of five have a more optimistic outlook for business and the US economy in 2021, with many expressing confidence that the worst of COVID-19 will soon be over. This coming Tuesday, we will be meeting with President Trump’s economic adviser Larry Kudlow, director of the US National Economic Council. A select group of ambassadors here in Washington, DC have been invited to Blair House – the Presidential Guest House – where we will be briefed on next year’s economic recovery program of the US.

Comparing the COVID-19 situation to the 1918 pandemic when a virus known as the Spanish flu spread all over the world, infecting one third of the global population as it came in three waves and killing an estimated 50 million people, we can say that the number of COVID-19 cases – while it continues to increase with the death toll also rising – will not be anywhere near the 1918 flu pandemic levels.

The silver lining in this pandemic situation today is the fact that technology is now leapfrogging even faster than before – helping mitigate the impact of COVID-19. For instance, thermal imaging scanners in places such as airports can detect fever – a common symptom of the coronavirus disease – even without close human contact.

Advancements in communications technology has also made telemedicine or telehealth possible, with doctors conducting teleconsultations through meeting apps such as Zoom and Google Meet for non-emergency cases. Mobile laboratories are minimizing the risk of hospital infection with lab technicians bringing test kits and portable medical devices such as ECG and 2D echo machines to test patients at home. More contactless payment options are now available through online and digital platforms – which were not possible in 1918.

We are actually managing much better today compared to before because of all these technological advancements, particularly in ICT that has made it possible to keep people informed and educated about the pandemic and how to mitigate its impact and prevent its spread through the wearing of face masks, social distancing, hand washing and other hygienic practices. With 5G now being rolled out in the Philippines by Smart, we can look forward to eventually keeping up with technologically advanced countries with high speed internet services that can make processes more efficient.

For those who thrive in always projecting a gloom and doom scenario, sorry but they will be disappointed to know that their dire projections will be proven to be totally inaccurate. According to the recent report from the Asian Development Bank, the Philippine economy is seen to rebound in 2021 at 6.5 percent.

“We believe the worst is now over and that the contraction in GDP bottomed out in May or June this year,” said ADB country director for the Philippines Kelly Bird, adding that the measures rolled out by the government helped the economy to bottom out, with growth expected to accelerate in 2021.

The country’s manufacturing sector also posted a seven-month high in September with the easing of restrictions in more places, according to the survey by IHS Markit. “New business expanded for the first time since February, albeit tentatively, while production levels dropped only slightly,” said an IHS Markit economist.

Signs of economic life are beginning to emerge, sparking hope among many Filipinos that things will get better sooner than later. Provincial buses have been allowed to resume trips to Metro Manila, PAL has resumed flights to Boracay which has been reopened and select establishments are being allowed to operate at full capacity in general community quarantine (GCQ) areas. However, people should not let their guard down and should continue to maintain health measures to prevent the spread of infection.

I am a firm believer in the Filipino patience and resilience – traits that allowed us to survive a lot more difficulties in the past. This pandemic will not bring us down – we will rebound even faster than expected with our innate strength and determination as Filipinos.

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