Philippine economy seen to grow 4.5% this year
MANILA – With the ongoing surge in COVID-19 cases, the Asian Development Bank said public spending on infrastructure and social assistance as well as improved vaccination drive, economic recovery is not far behind.
In a new report released by the Asian Development Bank Wednesday midmorning and citing from the Asian Development Outlook (ADO) 2021, the Bank’s flagship economic publication, it said the Philippine economy will grow by 4.5 in 2021 to 5.5% in 2022.
The statement disclosed substantial progress in the country’s vaccination rollout will help restore consumer and business confidence although uncertainties how the pandemic will unfold glopbally and domestically can pose risks to growth prospects.
“Our 4.5% growth forecast is at the lower end of economists’ estimates, so there are upsides to this projection,” said ADB Philippines Country Director Kelly Bird. He added priority should be given to address the “scarring effects” of the pandemic on private sector employment. He underscored the need for programs to support workers and companies affected by labor market adjustments and reforms to boost productivity growth and investment to help counter the negative effects of the pandemic on employment over the medium term.
What has been described as the government’s expansionary fiscal program and accommodative monetary policy is expected to put the economy on a firm recovery path by the second semester of 2021. It cited the government’s plans to strengthen labor market programs and help in the recovery of severely affected sectors by the pandemic which include agriculture and tourism, will support a pick-up of the economy.
The ADB statement said challenges remain, including “uncertainties” over the course of the pandemic as well as the emergence of new coronavirus variants worldwide.
“The Philippines’ COVID-19 vaccine rollout may suffer from global supply shortages in the short term, and local community quarantines could be extended to curb the spread of COVID-19,” the statement added.
Inflation expected to rise to 4.1% this year, from 2.6% in 2020 because of rising global commodity prices and other supply-side factors. It cited the African swine fever which resulted in disruptions to pork supply in the country. Inflation will ease to 3.5% next year as the government addresses supply-side pressures.
The current account surplus is expected to narrow to 2.5% of gross domestic product this year and 1.8% in 2022. Merchandise exports will increase with the rise in global trade, “as imports, especially in capital goods, rebound to support public infrastructure development.” (Melo M. Acuña)