By Alec Go
As more businesses and establishments reopen amid a decline in COVID-19 cases, the World Bank has projected that the Philippine economy will grow faster.
In its Regaining Lost Ground, Revitalizing the Filipino Workforce report released Dec. 7, the World Bank said the Philippine economy is forecast to grow 5.3% this year, or up from the 4.3% estimate last September.
This growth estimate is followed by a 5.8% growth from 2022 to 2023. The World Bank said the raised growth forecast followed the 7.1% growth rate in the third quarter of the year, which exceeded its 4.8% projection.
“Alongside the progress in vaccination, the domestic economy will further reopen, allowing for a return of market confidence, and more dynamic economic activity,” the report read.
“Public investment is expected to be a key growth driver in the medium term as the government is expected to pursue its infrastructure investment agenda, while private investment remains tepid due to subdued lending and market uncertainty,” it added.
The World Bank said public infrastructure disbursements may increase from 5.1% of 2021 gross domestic product (GDP) to 5.8% of 2022 GDP.
The bank expects household consumption to pick up with the gradual improvement in employment. The Philippine Statistics Authority (PSA) reported on the same day the unemployment dropped to 7.4% in October from September’s 8.9%.
The World Bank report noted that industry and services sectors growth will be supported by “phased economic reopening,” with the services sector benefiting from the opening of transportation, restaurant and food services, and wholesale and retail trade sectors.
It added that domestic tourism may get better with the reopening of tourist attractions, venue capacity expansion, and eased requirements for local tourists.
However, the banks’ agriculture prospects “remain weak due to a combination of chronic underinvestment and vulnerability to weather-related shocks.”
It also noted the country’s fiscal deficit may “remain elevated,” and is projected to reach 7.6% of the country’s 2021 GDP. This may “gradually decline over the medium-term” based on expected recovery and recurrent spending consolidation measures.
Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand, said the newly reported Omicron variant “has added a layer of uncertainty.”
“[But] economic reopening, along with progress in vaccination, is clearly strengthening domestic dynamism and market confidence,” Diop said.
The Omicron variant remains undetected in the Philippines, while the Delta variant remains its dominant variant. The latter has caused case surges in the third quarter, prompting the government to impose tighter protocols. – bny
