The Washington-based Institute of International Finance (IIF) has downgraded its 2020 and 2021 gross domestic product (GDP) projections for the Philippines due to the country’s slow COVID-19 containment.
The IIF’s Oct. 7 report titled “A Slow and Uneven Recovery” showed its latest 2020 GDP forecast for the Philippines was 7.5-percent contraction—poised to be the biggest economic recession post-war and beyond the government’s estimate of 4.5-6.6 percent drop.
In an email on Thursday, IIF Asia economist Yuanliu Hu told the Inquirer that third-quarter GDP likely contracted by 6.5 percent year-on-year, while the fourth quarter was estimated to shrink by 5.7 percent.
“We lowered the Philippines’ GDP forecast majorly due to the COVID-19 situation still not under control in the country as well as the new round of lockdown in August—it may have more lockdowns in the future,” Hu said.
“From the latest data, we didn’t see strong economic activity rebound and the government’s fiscal support remains low compared with peers in the region,” Hu added.
The Asian Development Bank’s COVID-19 policy database showed that the Philippines’ war chest to fight the health and socioeconomic crises inflicted by the COVID-19 pandemic stood at $21.45 billion or 5.83 percent of GDP as of Oct. 5.
For 2021, the IIF expects the Philippine economy to rebound with a 7-percent growth, although this was below the previous forecast of 7.5-percent expansion next year.
Hu said the less rosy outlook for 2021 was also “because the government is struggling to contain the virus—that’s the major reason I lowered next year’s rebound level.”
The IIF nonetheless expects GDP to revert to year-on-year growth starting the first quarter of next year following four straight quarters of contraction during the entire 2020. —Ben O. de Vera