The Association of Southeast Asian Nations (Asean)+3 Macroeconomic and Research Office (Amro) has slashed its 2021 growth forecast for the Philippines to 6.9 percent as the regional surveillance organization enjoined the country to fight the COVID-19 crisis better by controlling the virus spread and ramping up fiscal support.
Amro’s updated forecast contained in its Asean+3 Regional Macroeconomic Outlook 2021 report released on Wednesday was a downgrade from the previous projection last January of a 7.4-percent gross domestic product (GDP) growth this year following consultations between the organization and the Philippine government.
The downscaled forecast nonetheless remained within the government’s 6.5-7.5 percent target range.
For 2022, Amro projected a faster 7.8-percent GDP expansion, although below the 8-10 percent growth goal.
“The Philippines was hit hard in 2020—it’s a domestic demand and services-driven economy so it was heavily disrupted from the lockdown measures last year. And what we saw was with easing of measures, remittances still flowing in, [and] policy support, the economy has started to rebound,” Amro economist Anne Oeking told a press briefing.
“For this year, we actually expect that the growth rate will be one of the better ones in the region. Having said that, a large part of that is the base effect because 2020 was so weak and that does not mean that output losses will be recovered this year,” Oeking added.
The Philippines’ GDP slid by a record 9.5 percent last year, the worst post-war performance.
“In the short term, it’s those pandemic-related risks that are so important—we cannot expect the [Philippine] economy to strongly recover until the virus is under control. What’s going to be important now is targeted containment—containment that’s decisive, effective and proactive as far as possible, and the speedy rollout of vaccines that are accessible and acceptable,” Oeking said.
Across the 13 countries belonging to Asean+3, which besides the 10 Asean member-states included China, Japan and South Korea, the Philippines’ projected 2021 growth was only eclipsed by China’s 8.7 percent and Vietnam’s 7 percent.
However, Amro said “fiscal spending in the Philippines to fight the pandemic and support the economy has been relatively modest, at 23.5 percent of GDP in 2020, compared with some regional peers, whose expenditure reached as high as 53.9 percent of GDP.”
“Stronger fiscal support should be used to shore up the economy if the recovery were to falter or weaken,” Amro said.