The Asian Development Bank (ADB) expects the Philippine economy to recover at least 4.5 percent this year. Followed by 5.5 percent in 2022.
The country’s gross domestic product (GDP) projections assume a modest fiscal expansion, primarily through infrastructure spending and social assistance. This news is according to the ADB report, Asian Development Outlook (ADO) 2021, released on Wednesday. ADO 2021 also believes the vaccination programmes and global economic recovery are playing a part in the Philippines GDP recovery.
“This does tell us that the economy is on recovery,” ADB Philippines Country Director Kelly Bird said in a virtual press briefing.
Bird said this year’s growth forecast factored in the reimposition of strict community quarantine in Metro Manila and some neighbouring provinces amid rising infections, which delayed the reopening of the economy.
ADB says region to recover
“(But) this is not unique to the Philippines. The same huge surges in the spread of the virus (happen) in most other countries,” he said.
The ADB made a 6.5-percent growth forecast for the Philippines last December.
Bird said new estimates range between 4 percent to 6.5 percent. The estimates reflect the heightened uncertainty about how the pandemic will unfold globally and domestically in 2021.
ADB said there were more construction activities at the end of the fourth quarter last year and this year. He says that as the economy reopens to there will be boosts in productivity. These will cause larger multiplier effects.
However, Bird said downside risks include the global shortages in vaccine supplies that can delay the Philippine national vaccine rollout. He also cited the Mandanas ruling may affect public spending in 2022.
The country’s GDP shrank a record 9.5 percent in 2020 as strict coronavirus restrictions caused a decline in economic activities.
Meanwhile, the ADB forecast the country’s inflation rate to rise to 4.1 percent this year, up from 2.6 percent in 2020, on the recent buildup of price pressures amid increasing global commodity prices and other supply-side factors, including African swine fever.
The ADB has a number of programs within the region. Above all, most of the economies in the region are slated to recover provided there is no resurgence of the pandemic.