The reopening of the economy last December likely lifted the growth of 2021, but economists say that the infection surge at the start of the year is tampering the expansion of the gross domestic product (GDP).
In a report by Goldman Sachs Economics Research, it was noted that the Omicron variant has begun spreading in most Asia-Pacific economies. They said that the higher infection rates caused by the virus could still cause a significant rise in hospitalizations in the coming weeks.
The situation serves as a blow to the economy as the metro and its four surrounding provinces are placed under stricter Alert Level 3 restrictions until January 15. The move to increase the alert level is estimated to cost Php 3 billion of output losses per week.
As a result, Goldman Sachs cut its GDP projection for the Philippines to 7.1% instead of the 7.3% that was previously forecast.