December 15, 2021 | 00h00
MANILA, Philippines – The Philippines is expected to see strong growth through next year as the economy shows “impressive resilience”, with an accelerated vaccination campaign to counter threats from new variants of COVID-19, said the Asian Development Bank (ADB).
In its Asian Development Outlook 2021 supplement released yesterday, the Manila-based multilateral lender joined local and international think tanks and banks in increasing their optimism about the country’s growth trajectory this year and into 2022.
The AfDB raised its gross domestic product (GDP) forecast for 2021 for the country to 5.1%, from 4.5% in September.
The bank has also raised its expectations for 2022 to 6% from 5.5% previously.
This even as the GDP outlook for Southeast Asia has been reduced slightly to 3% following the recent tightening of mobility restrictions to curb the spread of the highly transmissible Delta variant.
The AfDB’s latest forecast is now in line with the government’s revised GDP growth target of four to five percent for the full year. The economy is coming from a 9.6 percent contraction last year.
The improvement in the AfDB’s projections for 2021 came after stronger than expected economic performance in the third quarter at 7.1%, despite the reimposition of foreclosure measures during the period.
Growth in the first three quarters of the year is 4.9%, reversing the 10.1% contraction of the same period last year.
AfDB Country Director Kelly Bird said the Philippine economy has shown “impressive resilience”.
âThe growth momentum has clearly accelerated thanks to the government’s vigorous campaign to immunize Filipinos against COVID-19. Public spending on infrastructure and continuing to immunize the population will help the country further accelerate its recovery in 2022, âsaid Bird.
Over the past three quarters, household consumption and investment have driven growth.
Private investment also rebounded as public construction growth accelerated in line with the country’s Build Build Build infrastructure program.
On the supply side, industry and services both contributed to growth in the first three quarters, but agriculture contracted with the drop in pork production.
The AfDB said consumer and business confidence improved steadily in the last quarter of the year as the vaccination program accelerated, contributing to the sharp drop in daily COVID-19 cases.
This has allowed the government to lower the alert level in Metro Manila and the rest of the country and to reopen businesses and other economic activities.
On the other hand, the AfDB has raised its inflation outlook for the Philippines this year and next.
The regional lender expects inflation to settle at 4.4 percent this year, from its earlier forecast of 4.1 percent, mainly due to higher fuel prices.
This is just slightly above Bangko Sentral ng Pilipinas’ 4.3% target. Since the start of the year, inflation is already 4.5%.
Inflation is expected to cool to 3.7% by 2022 as the base effects wane.
“Inflation in Southeast Asia is expected to remain subdued in 2021 despite inflationary pressures starting to increase in the Philippines, Singapore and Thailand, with economic reopening stimulating demand,” AfDB said.