The stock market performed poorly again last week.
Not surprisingly, many blame the government’s slow vaccination program as the biggest culprit. After all, on July 8, only 8 percent of Filipinos got their first jab, making the Philippines the second-best vaccinated country among ASEAN’s five largest member economies.
Although the vaccination rate has improved to 247,000 a day, the Philippines will not reach herd immunity until the end of 2022 at that rate.
Although the worst is over in terms of the latest wave of infections, the country’s low vaccination rate makes us vulnerable to another wave, especially with the more transmissible Delta variant spreading around the world.
While it is easier to be pessimistic than to be optimistic, a more detailed analysis of the country’s vaccination data points to a much brighter picture.
Due to the limited number of vaccines available and the cluster of infections in densely populated areas, the government prioritises the vaccination of Filipinos living in the NCR (National Capital Region) plus 8 – Metro Manila, Bulacan, Pampanga, Batangas, Cavite, Laguna, Rizal, Metro Cebu and Metro Davao.
Note that although NCR plus accounts for only 34 percent of the Philippines’ estimated population of 110 million, it accounts for 62 percent of all COVID-19 cases in the country. In fact, the NCR, which represents 13 percent of the population, accounts for the majority of total infections at 37 percent.
Prioritizing NCR plus, especially NCR, makes sense. After all, it is much easier to fully vaccinate 70 percent of the NCR plus population, which is only 26.8 million compared to full vaccination of 70 percent of all Filipinos, especially if it means addressing more than half of all COVID-19 cases in the country.
Another reason why it makes sense for the government to prioritize vaccination of NCR plus is its large share of the country’s GDP (gross domestic product). Based on data from the Philippine Statistics Authority, the regions where NCR plus 8 were 68.5 percent of GDP last year. When the high levels of vaccination lead to a marked decrease in infections, the government can confidently reopen NCR plus, helping to increase business activity and economic growth.
Looking at what the government has done so far in terms of vaccinating NCR plus, especially NCR, it seems to be doing a very good job.
As of July 5, 26.4 percent of Metro Manila residents have already received their first vaccine dose, while 8.7 percent are already fully vaccinated. These figures are far better than the national average of 8 percent and 2 percent, respectively. In addition, it is very likely that 30 million vaccines will arrive in the country in July and August, that the NCR will fully vaccinate 25 to 30 percent of the population in the next few months. At this level, the government may choose to reopen Metro Manila, just as what other countries did when they reached the threshold of 25 to 30 percent.
Meanwhile, although the pace of vaccinations is slower in other parts of NCR plus, due to the smaller size of the population and the increasing number of vaccines arriving in the next few months, herd immunity is still possible at Christmas. After all, less than 50 million doses are needed to fully vaccinate 70 percent of the NCR plus population over the next six months, which is very feasible given the current pace of vaccinations.
There is also an increasing urgency among local officials outside the NCR to vaccinate their constituents given the increase in infections occurring in different parts of the country. Because of this, the pace of vaccinations may still increase as the supply of vaccines increases so that the Philippines can reach flock immunity by the end of 2022.
For the reasons mentioned, I will not be surprised if the Philippines has a strong economic recovery before the end of this year, even though less than half of the country is fully vaccinated by then.
That said, the ongoing correction in the stock market should not be seen as terrible, but rather as an opportunity to buy stocks at a lower price before it becomes obvious to everyone that the Philippine economy and the stock market are convincing on their way back to prepandemic levels. . INQ
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