Amid weak recovery in consumer confidence and spending, the Asian Development Bank (ADB) further downscaled its outlook for the Philippines, saying the economy will suffer from a steeper drop of 8.5 percent this year.
The Manila-based lender’s latest forecast contained in its Asian Development Outlook Supplement report for December 2020 released on Thursday showed less optimism than the projection just last September of a 7.3-percent sagging.
Among multilateral institutions, the ADB’s projected decline in the Philippines’ gross domestic product (GDP) was the biggest, compared with Washington-based International Monetary Fund’s and World Bank’s 8.3 percent and 8.1 percent, respectively.
The ADB attributed its downgraded 2020 GDP forecasts for the Philippines, Indonesia and Malaysia to their stringent COVID-19 containment measures, which have been hampering economic recovery.
In the case of the Philippines, the ADB noted “household consumption and investment have fallen more than expected” alongside the GDP drop averaging 10 percent from January to September. The bigger-than-expected end-September GDP contraction reflected “muted consumer and business activity and confidence under the pandemic,” the ADB said.
A GDP contraction of 8.5 percent this year would be the worst economic recession the country would be in postwar. Still, this would be at the lower end of the government’s projection of 8.5-9.5 percent.
For 2021, the ADB kept its GDP growth forecast of 6.5 percent, “assuming that public investment picks up and the global economy recovers.” The government is targeting a 6.5-7.5 percent expansion next year.
As for inflation, the ADB slightly raised its 2020 forecast for the Philippines to 2.5 percent from 2.4 percent previously. The 2021 inflation projection remained at a higher 2.6 percent.
In a separate report also on Thursday, UK-based Oxford Economics said the Philippines was among countries that would be suffering from worst post-COVID-19 scars.
Oxford Economics head of India and Southeast Asia economics Priyanka Kishore projected the Philippines’ GDP in 2025 would be 8-percent lower than the estimated level had the pandemic not happened.
Last month, Oxford Economics assistant economist Makoto Tsuchiya told the Inquirer they expected the Philippine economy to shrink by as much as 9.9 percent this year. INQ