This Sept. 6, 2020 file photo shows part of Manila Bay and buildings on Roxas Boulevard, Manila. Japanese investment bank Nomura on December 9 cut its Philippine growth forecast for 2021 to 6.8 percent from 7.1 percent on continued worried over the rising number of Covid-19 cases in the country. (The Manila Times file photo)

Japanese investment bank Nomura expects the Philippines to have a slower economic recovery next year as it remains concerned over the still-growing number of coronavirus disease 2019 (Covid-19) cases in the country.

In a report on Wednesday, Nomura said it further cut its 2021 gross domestic product (GDP) growth estimate for the country to 6.8 percent from 7.1 percent.

The latest figure is still an improvement from its 2020 forecast of -9.8 percent, largely because of base effects. It falls within the government’s official forecast range of 6.5 to 7.5 percent, but falls below the consensus projection of 7.8 percent.

“Our forecast implies [the] economic output does not return to pre-Covid levels until 2022. The main reason for our more cautious view on the pace of the recovery is the continued drag from the Covid-19 [pandemic], which we think is unlikely to be brought under control until the vaccine pivot point arrives in Q4 (fourth quarter) (our baseline assumption),” it explained.

It said the Philippine was likely to be among the laggards in receiving the Covid-19 vaccines and distributing them across the archipelago, since the government was yet to finalize any significant procurement plan and was still negotiating deals to secure a sizeable number of doses.

“In the meantime, the government seems to be prioritizing a further economic reopening in Q4, which some local experts warn can only be possible if ‘facilities can absolutely guarantee observance of the minimum health standards,’” Nomura added.

It also warned that reopening the economy further while coronavirus cases continue to increase at a high rate could prove risky.

New cases remained high even if the daily rate declined to an average of 1,697 in November from 2,227 in October, according to the investment bank.

“A premature reopening risks another resurgence, as we have seen in other countries. We believe that, unless the Covid-19 [pandemic] is brought under control, sustaining any recovery will be challenging as the [crisis] continues to weigh on the already low levels of confidence among households and businesses,” it said.

The still-low level of fiscal expenditure growth may remain a drag to the recovery in the context of the pandemic, which would require more sizeable support measures, it added.

“Without these measures, the risk of more permanent scarring in the economy increases, as vulnerable sectors [are] likely [to] remain under significant pressure for a prolonged period, like SMEs (small and medium enterprises) facing liquidity issues that turn into insolvency problems, potentially forcing layoffs and even shutdowns,” Nomura warned.

For 2021, the bank forecasts a modest narrowing of the fiscal deficit to 7.4 percent of GDP, compared with the programmed 8.9 percent.