AFP FILE PHOTO
With the mass vaccination program against COVID-19 in full swing, thus allowing greater economic reopening, the Asian Development Bank (ADB) has turned more bullish about the Philippines’ recovery and jacked up 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 Supplement report for December released on Tuesday showed an upgraded 2021 gross domestic product (GDP) growth projection to 5.1 percent—above the government’s 4 to 5 percent target—from 4.5 percent in September. The economy grew by an average of 4.9 percent during the first nine months following a surprise 7.1-percent year-on-year jump in third-quarter economic output.
Growth drivers
“Household consumption and investment were the major growth drivers from January to September. 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. 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,” the ADB added.
For 2022, the ADB now expects the Philippines’ GDP to grow by 6 percent, up from its previous estimate of 5.5 percent. But the ADB’s growth forecast for next year remained below the government’s 7 to 9 percent goal.
Impressive resilience
“The Philippine economy has shown impressive resilience. Growth momentum has clearly picked up on the back of the government’s vigorous drive to vaccinate Filipinos against the COVID-19 virus. Public spending on infrastructure and continued vaccination of the population will help the country further accelerate its recovery in 2022,” ADB Philippines country director Kelly Bird said in a statement.
“Public spending on major infrastructure projects will support the country’s economic growth. 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,” it said.
The ADB noted that it was currently financing big-ticket infrastructure projects like the 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.
The ADB had also been funding the Philippines’ vaccine purchases, including the most recent $250-million loan it approved to buy booster and pediatric shots. Last March, the ADB also extended a $400-million loan to beef up supply of COVID-19 vaccines in the country.
Multilateral lenders like the ADB directly paid vaccine suppliers to ensure transparency as the money no longer passed 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 were already fully vaccinated as of Dec. 7. Another 9 percent had at least one dose of COVID-19 jabs.
Separate ADB data showed that among the 11 Southeast Asian countries, the Philippines ranked nine in vaccination rate, only better than Timor-Leste and Myanmar.