The World Bank (WB) has further slashed its growth outlook for the Philippines to 4.7 percent this year, even as the Washington-based multilateral lender remained optimistic that the ongoing mass inoculation against COVID-19—if further sped up—would allow consumer spending and businesses to rebound in the near term.
The World Bank’s latest gross domestic product (GDP) growth forecast for 2021 was not only a downgrade from the 5.5-percent projection in March but also way below the government’s downscaled target range of 6-7 percent.
World Bank senior economist for the Philippines Kevin Chua said in a press briefing on Tuesday that the downward revision reflected the worse-than-expected 4.2-percent year-on-year GDP decline in the first quarter plus the reimposed stricter lockdowns in National Capital Region (NCR) Plus before March ended up to mid-May.
Also, elevated inflation and job losses which, in turn, resulted in income losses among vulnerable households, did not help, Chua added.
The World Bank’s Philippine Economic Update report also released on Tuesday noted that “the resurgence of new COVID-19 cases and rising inflation have derailed the early signs of economic rebound in 2021.”
“As lockdown restrictions eased in early 2021, people’s mobility stepped up, and employment and earnings of families gradually improved. The better external environment also led to an expansion in trade. However, the surge in COVID-19 cases beginning in late March amid rising inflation derailed the momentum for recovery,” the World Bank said.
Chua was nonetheless optimistic that progress on the nationwide vaccination program, especially expectations of faster rollout during the second half of 2021, would boost the confidence level of businesses as well as consumers.
Chua said this would allow a 5.9-percent GDP growth in 2022 and a faster 6 percent in 2023. The government targets 7 percent to 9 percent growth next year and 6 percent to 7 percent in 2023 and 2024.
The government remained supportive of economic recovery as it continued to spend much on infrastructure and capital outlays despite the pandemic, Chua said.
While the poverty rate had been estimated to possibly rise by about 1.4 percentage point last year amid the pandemic-induced recession, Chua said poverty incidence may decline in the next two years alongside the revert to economic growth starting 2021. INQ