The Asian Development Bank said Thursday it expects the Philippine economy to contract 3.8 percent this year, a reversal of the actual 6-percent expansion a year ago, because of the debilitating impact of the coronavirus disease 2019 pandemic.
It was also a downward revision from the 2-percent growth estimated made by the bank in April 2020. The latest forecast was contained in the supplement to ADB’s annual flagship economic publication, the Asian Development Outlook 2020.
The expected 3.8-percent contraction of the Philippine economy this year is better than the -6.5 percent estimate for Thailand, -6 percent for Singapore, -5.5 percent for Cambodia and -4 percent for Malaysia.
Indonesia is expected to contract by 1 percent, Laos by 0.5 percent and Timor-Leste by -3.7 percent. Vietnam is expected to post the fastest growth this year at 4.1 percent, followed by Myanmar at 1.8 percent and Brunei at 1.4 percent.
“Economic activity in Southeast Asia is expected to contract by 2.7 percent this year before growing by 5.2 percent in 2021. Contractions are forecast in key economies as containment measures affect domestic consumption and investment, including Indonesia [-1.0 percent], the Philippines [-3.8 percent], and Thailand [-6.5 percent],” ADB said.
“Vietnam is forecast to grow 4.1 percent in 2020. While that is 0.7 percentage points lower than ADB’s April estimates, it is the fastest growth expected in Southeast Asia,” the bank said.
Developing Asia is seen to barely grow by 0.1 percent this year, down from the 2.2-percent growth forecast in April and would be the slowest growth for the region since 1961. Growth in 2021 is expected to reach 6.2 percent, as forecast in April.
The interagency Development Budget Coordination Committee earlier predicted that the Philippine economy would contract by 2 percent to 3.4 percent this year because of the pandemic.
GDP contracted by 0.2 percent in the first quarter, a turnaround from the 5.7-percent a year ago and 6.4 percent in the fourth quarter of 2019.
Economic managers expect a strong recovery of 7.1 percent to 8.1 percent next year, banking on the timely implementation of a well-targeted recovery program and the continued implementation of big-ticket infrastructure projects under the “Build, Build, Build” program.