The Asian Development Bank on Tuesday kept its economic growth forecasts for the Philippines at 4.5 percent in 2021 and 5.5 percent in 2022, taking into account the gradual recovery from the global health crisis and the faster pace of vaccination against COVID-19.
“While Philippine GDP shrank by 4.2 percent in Q1 2021, this improved on the previous 4 quarters and aligned with growth forecasts in April. Sustained government spending on infrastructure and social assistance programs is supporting recovery, as did a gradual pickup in household spending aided by strong remittances,” the bank said in its Asian Development Outlook for July 2021 report.
It said private investment remained sluggish, but indicators such as Purchasing Managers Index, industrial production and imports improved gradually.
“The government’s vaccination effort has accelerated to over 250,000 jabs daily, improving the prospects that community protection in metropolitan Manila could be achieved by year-end. Growth forecasts are maintained at 4.5 percent in 2021 and 5.5 percent in 2022,” the ADB said.
Data showed the country’s gross domestic product contracted by 9.6 percent in 2020, the worst since World War 2, amid the pandemic. The GDP in the first quarter posted a lesser contraction of 4.2 percent, compared to an the 8.3-percent decline in the fourth quarter of 2020.
Economic managers expect the economy to recover this year, growing between 6 percent and 7 percent driven by the rollout of vaccination program that could spur business and consumer confidence. Economic managers expect the GDP to be in the positive territory after five quarters of contraction.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier urged the national government to intensify the rollout of COVID-19 vaccination program, saying the threats posed by the more deadly delta variant of the virus could derail the full recovery of the domestic economy.
The Department of Health reported that as of July 19, about 15,096,261 vaccine doses were administered throughout the country. The government aims to inoculate 50 to 70 million of its population of around 110 million by yearend.
Meanwhile, the ADB cut its 2021 GDP growth forecast for Southeast Asia from 4.4 percent to 4.0 percent because of mobility restrictions re-imposed to combat a COVID-19 resurgence across the region.
GDP forecasts were downgraded for Indonesia, the Lao People’s Democratic Republic, Malaysia, Thailand, Timor-Leste and Viet Nam. They were unchanged for Brunei Darussalam, Cambodia, Myanmar, and the Philippines. The growth forecast for Singapore was upgraded.
The report said recovery was under way in developing Asia, but the growth projection for this year was revised down from 7.3 percent in April to 7.2 percent following renewed virus outbreaks in some economies. The projection for 2022 was upgraded from 5.3 percent to 5.4 percent.
East Asia’s 2021 growth forecast was raised from 7.4 percent to 7.5 percent, reflecting a strong first quarter. Expansion in China is projected at 8.1 percent in 2021 and 5.5 percent in 2022 as favorable domestic and external trends align with April forecasts.
It said that in South Asia, new waves of infections prompted a lower growth forecast of 8.9 percent for 2021, followed by growth at 7.0 percent in 2022. India’s 2021 growth projection was downgraded from 11 percent in April to 10 percent.