IMF downgrades GDP forecasts for PH

Amid a protracted fight against COVID-19 and expectations of a longer period for mass vaccination to control the deadly coronavirus, the International Monetary Fund (IMF) expects a faster fall in the Philippines’ gross domestic product (GDP) last year on top of a slower recovery this year.

In an email on Tuesday, IMF resident representative in the Philippines Yongzheng Yang said the Washington-based multilateral lender has forecast a faster GDP drop in 2020 of 9.6 percent compared to its previous estimate of 8.3-percent contraction.

The government on Thursday will report on the 2020 GDP performance, which was poised to be the worst turnout post-war and bigger than the government’s estimate of 8.5 to 9.5 percent decline.

“The downward revision for 2020 mainly reflects the larger-than-expected year-on-year contraction in the third quarter,” during which GDP fell 11.5 percent as Metro Manila and four neighboring provinces accounting for half of the economy reverted to a stricter two-week lockdown in August when cases surged when quarantine restrictions were eased.

Citing the IMF’s latest estimates in its January 2021 World Economic Outlook (WEO) Update report released on Tuesday, Yang said GDP would likely grow by 6.6 percent this year, lower than the previous projection of a 7.4-percent expansion but within the government’s 6.5 to 7.5 percent target.

For 2022, the IMF sees a 6.5-percent growth, below the government’s goal to expand GDP by 8 to 10 percent.

“The projected rebound in 2021 and 2022 is primarily driven by a renewed infrastructure investment push and a gradual recovery of the private sector, supported by accommodative monetary policy and global recovery,” Yang said, referring to the Duterte administration’s ambitious “Build, Build, Build” program.

For Yang, the Philippines has benefited from a steady flattening of the infection curve since end-September 2020.

“We understand that the Philippine authorities have been making every effort to prepare for a vaccine rollout. However, like in most other countries, vaccination is a gradual process and social distancing will persist in 2021. Overall, we expect a robust recovery in 2021-2022, with progress on vaccination and a steady reopening of the economy,” Yang said. INQ