The Philippine economy will record an even slower economic growth this year following a steep crash in 2020, the World Bank says. From a growth forecast of 5.5%, the global lender now sees a 4.7% expansion.
Metro Manila (CNN Philippines, June 8) The Philippine economy will record an even slower economic growth this year following a steep crash in 2020, the World Bank said Tuesday.
From a growth forecast of 5.5% in March, the global lender now sees a 4.7% expansion for 2021.
World Bank economist Kevin Chua said the Philippine economy is expected to recover this year, but this is hinged on the ability to manage the COVID-19 health crisis, effective pandemic containment, mass vaccinations, and further loosening of quarantine restrictions. He added that the path to recovery appears “fragile and challenging,” despite initial signs that both mobility and business activity initially picked up at the start of 2021.
“Scaling up testing, tracing, isolation and treatment measures along with the rollout of vaccination are key to the public health response,” Chua said in a virtual briefing.
“Failure to effectively contain the virus or implement the mass vaccination may extend mobility restrictions, which could lead to a further drop in income losses, disrupt businesses and delay economic recovery.”
The Philippines is among the last countries in the region to start its vaccination drive, only rolling it out on March 1 and with doses slow to come in for the past three months.
The country likewise saw a resurgence in infections, which started in Metro Manila and nearby provinces, collectively known as NCR Plus. It has now reached parts of Visayas and Mindanao.
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The 4.7% growth projection will partly reverse last year’s 9.6% recession but is well below the government’s already downscaled forecast of 6-7% this year.
Meanwhile, growth is seen picking up to 5.9% in 2022 and 6% in 2023 although slower than the annual economic performance pre-pandemic.
Chua said the revised forecast factors in the 4.2% contraction in the first three months of 2021 and the return to lockdowns in April to May for Metro Manila and the rest of the NCR Plus Bubble.
He added that the pandemic likely drove an additional 2 million Filipinos into poverty in 2020.
“If the economy recovers sooner and also the support that is given during the pandemic is given by the government including social transfer programs, then this can help decrease the poverty incidence,” the World Bank official said.
Meanwhile, he noted that the country is better of providing “targeted” assistance, in contrast to a proposed law providing a 2,000 cash aid to all Filipinos regardless of income status.
“When it comes to expenditure, we have to be efficient, we must spend wisely and part of it is being targeted in our approach… the multiplier effect, the benefit would be much bigger,” Chua said.
This is part of the Bayanihan 3 stimulus bill passed by the House of Representatives last week.
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