Weighed down by the COVID-19 pandemic, the Philippine economy is forecast to grow at 4.7% this year before accelerating to 5.9% in 2022 and 6% in 2023, according to the Philippines Economic Update (PEU) released today by the World Bank.
These forecasts reflect revisions to growth projections published in the April 2021 World Bank East Asia and the Pacific Economic Update, due to the larger-than-expected economic contraction in the first quarter, the reimposition of stricter quarantine measures in April and May in response to a surge in COVID-19 infections, and the lingering challenges from high inflation and losses in household incomes.
“The global economic rebound, especially among the country’s trading partners, will boost exports and increase remittances, strengthening recovery in the Philippines,” said Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand.
“The country can take advantage of this development by ramping up vaccination and improving overall pandemic response to control infection rates and boost consumer and business confidence.”
The PEU notes 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 PEU writes that the pandemic has badly hit poor families and the health and schooling of their children.
In a recent World Bank household survey, two in five households were worried about not having enough food for the ensuing days. Households reported difficulty accessing health services due to a lack of income. Three in five households cited this as a reason for not obtaining much-needed medical treatment.
Most households reported that their school-aged children were enrolled in school, but the effectiveness of distance learning is a big concern, especially among poor households. Only 40% of the poorest households have internet access, compared to 70% pamong the richest households.
Kevin Chua, World Bank Senior Economist, said the effective delivery of social protection programs will help to reduce the extent to which the crisis has adversely affected poor and vulnerable families.
“COVID-19 pandemic-related shocks, including hunger incidences, have already manifested in higher levels of child malnutrition, especially among the poor,” said Chua.
“Social programs, including cash transfers, can help alleviate food and subsistence conditions. National and local government authorities need to coordinate their efforts to ensure timely and efficient deployment of these programs,” he added.
The PEU also stresses that mobilizing private sector participation in infrastructure projects will be important as the government faces limited fiscal space in the near term due to slower growth.
The report adds that rules on foreign direct investments remain restrictive in the Philippines. Allowing greater foreign participation in the economy can help improve infrastructure and strengthen economic growth. (World Bank) – jlo
