Regional surveillance organization Asean+3 Macroeconomic Research Office (Amro) has slashed its 2021 growth forecast for the Philippines to 4.3 percent as consumer spending—the domestic economy’s prime mover—took a hit from the prolonged COVID-19 quarantine.
Amro’s updated gross domestic product (GDP) projection in its Asean+3 Regional Economic Outlook 2021 Update report on Thursday was less optimistic than its estimate of 6.9 percent in March, even as it was within the government’s downgraded 4-5 percent target range.
Amro also downscaled its GDP growth forecast for 2022 to 6.7 percent—below the government’s 7-9 percent goal—from 7.8 percent previously.
In a press briefing, Amro chief economist Hoe Ee Khor attributed their new forecast to shocks in private consumption as well as badly hit small businesses, which he said should get additional support given the government’s still “moderate” fiscal space to ramp up stimulus spending and prevent deep-scarring effects.
It did not help that Amro sees above-target inflation of 4.3 percent this year, higher than the previous estimate of 3.8 percent.
By 2022, Amro projected headline inflation to return within the government’s 2-4 percent target band of manageable price hikes and average 3.2 percent, lower than the previous 3.3-percent projection.
Khor said the vaccination rate in the Philippines, which he noted was ramping up recently, would help the consumption-driven economy recover.
Amro expects the Philippines to achieve its target inoculation rate, or all adults fully vaccinated, by early next year, Khor said.
A separate World Bank report on Thursday said the Philippines would likely vaccinate 60 percent of its population by the second quarter of 2022.
The World Bank said “vaccine availability is now the binding constraint on vaccination in the larger East Asia and Pacific countries like Indonesia, the Philippines and Vietnam.”
At present, “coverage is still low in several East Asia and Pacific countries, like Indonesia, the Philippines and Vietnam, and vaccine availability is still an issue because of limited global production capacity and the decision to provide booster vaccines in industrial countries,” the World Bank said.
“At current pace of vaccine administration, and given estimates of availability, several East Asia and Pacific economies could reach 60 percent of total population that is fully vaccinated over the next months, with China and Mongolia already there and Indonesia and the Philippines likely to get there in the first half of next year,” it added.