COVID-19 affects PH economy for 2020; recovery in sight in 2021
Slide in GDP growth seen due to COVID-19, ADB says
MANILA – The country’s economic growth will slow significantly this year before it regains momentum in 2021 with expansionary fiscal and monetary policies offsetting slower domestic demand and disruptions in tourism, trade, and manufacturing.
This was according to the Manila-based Asian Development Bank (ADB) in its Asian Development Outlook (ADO) 2020. The country’s gross domestic product (GDP) will grow at 2.0% in 2020 due to the “enhanced community quarantine” enforced by the government last month to curb the spread of the novel corona virus disease (COVID-19) across the archipelago.
“This unprecedented and extraordinary public health emergency brought about by COVID-19 pandemic will substantially slow down economic growth this year, with most of the contraction in the economy occurring in the second quarter. We are anticipating a bound back starting in the second half of this year, supported by the government’s stimulus spending and easier monetary policies,” said ADB Country Director for the Philippines Kelly Bird.
He added the ADB has extended two grants amounting to US$8 million to help the government and now in the advanced states of preparing a larger and comprehensive assistance to help alleviate the impacts of the pandemic on communities’ well-being and support fiscal stimulus.
The quarantine measures shut down schools and most government offices and private establishments in Metro Manila and the entire Luzon island which accounts for over half of the country’s total population and generates more than two-thirds of the country’s overall GDP.
The report said sustained public investment in priority projects falling under its infrastructure development program will drive a rebound in private consumption will trigger economic growth next year. It is expected the economy will benefit from the government’s large-scale fiscal spending to boost the delivery of relief measures to vulnerable sectors severely affected by the pandemic.
Inflation is expected to reach 2.2% this year and 2.4% in 2021 with further downside pressure from lower global oil prices.
In its statement the ADB said with inflation expected to remain within the central bank’s target range of 2.0% to 4.0%, authorities have room for further monetary policy expansion to mitigate lingering effects f the pandemic on the economy.
Aside from the country’s fight against the pandemic, the Philippines is taking steps to address climate change as the government’s infrastructure development program emphasizes improvement of mass urban transit systems to reduce the country’s carbon footprint. One of the ADB’s projects is the Malolos-Clark Railway project which is 53 kilometers in length. It will be an elevated railway project that will connect Metro Manila to northern provinces. (Melo M. Acuña)
Mr.Kelly Bird, ADB Country Director for the Philippines. (ADB Photo)