World Bank Revises Down 2021 Projected Growth for Philippines

Marielle Lucenio
Manila
2021-06-08
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World Bank Revises Down 2021 Projected Growth for Philippines A worker stands on the scaffold of a building under construction in Manila, May 19, 2021.
Basilio Sepe/BenarNews

The Philippine economy will grow by 4.7 percent this year, the World Bank said Tuesday as it revised down an earlier forecast of 5.5 percent growth for 2021, citing ongoing challenges tied to the coronavirus pandemic.

The revised forecast, as reflected in the multilateral lending agency’s latest Philippine Economic Update (PEU), linked the projected slower growth rate to lingering effects from an economic contraction in the first quarter and the government’s re-imposition of stricter COVID-19 quarantine measures during the past two months.

“The PEU notes that the resurgence of new COVID-19 cases and rising inflation have derailed the early signs of economic rebound in 2021,” the World Bank said in a statement Tuesday as it released its update on the Philippine economy.

“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.”

In a report on region-wide economic growth published in late March, the World Bank then forecast that the Philippine economy would grow by 5.5 percent in 2021. The revised forecast sees economic growth in the Southeast Asian nation accelerating to 5.9 percent in 2022 and 6.0 percent in 2023.

“COVID-19 pandemic-related shocks, including hunger incidences, have already manifested in higher levels of child malnutrition, especially among the poor,” said Kevin Chua, a senior economist at the World Bank.

He recommended the government undertake social programs, including cash transfers to help low-income people during the crisis.

“National and local government authorities need to coordinate their efforts to ensure timely and efficient deployment of these programs,” Chua said in a statement.

The Philippines is battling one of Asia’s worst coronavirus outbreaks.

On Tuesday, the health department reported that the number of infections here had reached 1,280,773 cases, with close to 5,000 new cases detected overnight. More than 22,000 people in the Philippines have died of COVID-19.

Meanwhile, much of the country remains on various stages of lockdown, with Manila and nearby provinces under strict COVID-19 movement rules. 

According to official data from the government, the Philippine economy shrank by 4.2 percent in the first three months of 2021, extending a recession to five quarters. Overall growth forecast for the year ranges from 6.5 percent to 7.5 percent, Philippine economic managers have said.

Late Tuesday, a spokesman for President Rodrigo Duterte responded to the revised outlook from the World Bank. 

“The projection is because of the new variants that forced us to have new restrictions in Metro Manila, where 63 percent of our GDP comes from,” spokesman Harry Roque told BenarNews.

“So, it is not surprising why our unemployment rate also rose because we have been on lockdown. But it was needed so that we could achieve total health, that [could] we make sure that we minimize poverty while controlling the dramatic rise in cases because of these new variants.”

The government’s strategy, he said, was to prioritize controlling the virus through vaccinations, he said.

“And because of this strategy, we believe that we can recover even as the World Bank has said that recovery would not be that fast,” Roque said.

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