COVID-19 impact and rising inflation pull down GPD projections for the Philippines
World Bank lowers Philippine growth projections
MANILA – The COVID-19 pandemic severely affected the Philippine economy with the World Bank reducing its growth forecast to 4.7 percent this year before recovering to 5.9 percent in 2022 and 6.0 in 2023.
This was how the Philippines Economic Update looks at the prevailing economic conditions today. The report was released today at 10:00 A.M.
The forecasts mirror revisions to growth projects earlier released in April 2021’s World Bank East Asia and the Pacific Economic Update, because of the larger-than-expected economic meltdown within the year’s first three months, the reimposition of stricter quarantine measures in April and May because of a surge in COVID-19 cases, and the challenges from high inflation and losses in household incomes.
“The global economic rebound especially among the country’s trading partners, will boost exports and increase remittances, strengthening recovery in the Philippines,” said Ndiame Diop, World bank Country Director for Brunei, Malaysia, Philippines and Thailand. He added the country can take advantage of this development by ramping up vaccination and improving overall pandemic response to control infection rates and boost consumer and business confidence.
The PEU said the resurgence of new COVID-19 cases and the increasing inflation derailed the early signs of economic rebound in 2021. With the lockdown restrictions eased in early 2021, people’s mobility increased along with employment and earnings. According to the statement, the better external environment also led to an expansion in trade. But the surge in COVID-19 cases from late March coupled with rising inflation derailed the recovery momentum.
As expected, the PEU said the4 pandemic “has badly hit poor families” along with the health and schooling of their children.
The World Bank conducted a household survey and found two (2) in five (5) households were worried about not having enough food for the coming days. Households reported difficulty assessing health service because of lack of income. Three in five households cited this as a reason for not availing medical treatment.
Majority of the households disclosed their school-aged children were enrolled in school, but the effectiveness of distance learning is a big concern particularly among poor households. Only 40 percent of the poorest households have internet access, compared to the 70 percent among the most affluent households.
World Bank Senior Economist Kevin Chua said effective delivery of social protection programs will help reduce the extent to which the crisis has adversely affected poor and vulnerable families.
“COVID-19pandemic-related shocks, including hunger incidences, have already manifested in higher levels of child malnutrition, especially among the poor,” said Chua. He added social programs, including cash transfers, can help alleviate food and subsistence conditions. National and local government authorities need to coordinate their efforts to ensure timely and efficient deployment of these programs.
The PEU, according to the WB statement, underscored the need for mobilizing private sector participation in infrastructure projects will be important as the government faces limited fiscal space in the near term because of slower growth. The report adds that rules on foreign direct investments remain restrictive in the Philippines. Allowing greater foreign participation in the economy can help improve infrastructure and strengthen economic growth. (Melo M. Acuña)
World Bank Country Director for Brunei, Malaysia, Philippines and Thailand Ndiame Diop. (WB File Photo)