ADB raises PH growth forecast despite vaxx rate slack in Southeast Asia
MANILA, Philippines—With the mass vaccination program against COVID in full swing and allowing greater economic reopening, the Asian Development Bank (ADB) has turned more bullish about the Philippines’ recovery and raised its 2021 and 2022 growth forecasts for its host-country.
Moody’s Analytics, however, remained worried about the relatively low vaccination rate in the Philippines compared to most of its neighbors, and warned of risks of returning to stringent quarantine measures if more contagious strains like Omicron spread.
The ADB’s Asian Development Outlook (ADO) Supplement report for December released on Tuesday (Dec. 14) showed an upgraded 2021 gross domestic product (GDP) growth projection of 5.1 percent — above the government’s 4-5 percent target — from 4.5 percent in September.
The economy grew by an average of 4.9 percent during the first nine months of 2021 following a surprise 7.1-percent year-on-year jump in third-quarter economic output.
“Household consumption and investment were the major growth drivers from January to September,” the ADB said.
“Private investment bounced back while public construction growth accelerated in line with the country’s ‘Build, Build, Build’ infrastructure program. Exports rose but were outpaced by imports, with capital goods a key contributor,” the ADB said.
“On the supply side, industry and services both contributed to growth in the first three quarters, though agriculture contracted as pork production fell,” ADB added.
“Consumer and business confidence improved steadily in the fourth quarter of 2021 on acceleration in the government’s vaccination program, a sharp drop in new COVID-19 cases, and further reopening of the economy. Growth forecasts are therefore raised substantially,” it said.
For 2022, ADB expects the Philippines’ GDP to grow by 6 percent, up from its previous estimate of 5.5 percent. However, ADB’s forecast was below the government’s 7 to 9 percent goal.
“The Philippine economy has shown impressive resilience,” said Kelly Bird, ADB Philippines country director.
“Growth momentum has clearly picked up on the back of the government’s vigorous drive to vaccinate Filipinos against the COVID-19 virus,” Bird said in a statement.
“Public spending on infrastructure and continued vaccination of the population will help the country further accelerate its recovery in 2022,” said Bird.
“The ADB has been supporting the government’s ‘Build, Build, Build’ infrastructure development program, which seeks to boost investments on roads, bridges, and railways to fuel faster growth, especially in areas outside the capital Metro Manila,” said Bird’s statement.
ADB noted that it was currently financing big-ticket infrastructure projects like Angat water transmission improvement, EDSA greenways, and Malolos-Clark railway. “The bank is preparing a $175-million loan to assist the government in building climate- and disaster-resilient bridges to improve road traffic flow in Metro Manila,” it added.
ADB has also been funding the Philippines’ vaccine purchases, including the most recent $250-million loan it approved to buy booster and pediatric shots. Last March, ADB also extended a $400-million loan for more supply of COVID vaccines.
Multilateral lenders, like ADB, directly pay vaccine suppliers to ensure transparency as the money no longer passes through the Philippine government.
But Moody’s Analytics senior Asia-Pacific economist Katrina Ell said in a separate report on Tuesday that “economic recoveries are largely back on track and vaccination coverage has increased substantially across most of the region, but there are exceptions.”
“Indonesia and the Philippines stand out due to their low vaccine coverage increasing vulnerability to another infection wave that necessitates the reintroduction of movement controls,” Ell said.
Moody’s Analytics data showed that about 28 percent of the Philippines’ population was already fully vaccinated as of Dec. 7. Another 9 percent had at least one dose of COVID jabs.
Separate ADB data showed that among the 11 Southeast Asian countries, the Philippines ranked ninth in vaccination rate, only better than Timor-Leste and Myanmar.
