MANILA - The Philippines has maintained its strong economic fundamentals despite the “shock” caused by the COVID-19 pandemic, a senior economist with the World Bank said on Wednesday.
Economist Rong Qian said the Philippines has very low external debt, very high international reserves as well as an accommodating and responsive monetary policy and flexible exchange rate.
She said that this partly explained why the country has seen a low level of portfolio investment outflows despite the economic crisis triggered by measures implemented to check the spread of COVID-19.
“This is a health pandemic, there is nothing affecting the Philippine fundamentals so investors shouldn't believe that, because of this shock, the macro fundamentals of the country will be weakened,” the World Bank economist said in an interview on ANC.
The World Bank earlier said that among major emerging economies in Asia, the Philippine economy would contract the most this year, along with Malaysia and Thailand.
The World Bank reduced its forecast for the Philippines by 8 percentage points this year, with the economy seen posting a -1.9 percent growth from an earlier forecast of 6.1 percent.
Growth, however, is expected to bounce back to 6.2 percent in 2021, the World Bank said.
While the outbreak appears to have largely subsided in China, Malaysia, and Vietnam, it has not yet peaked in the Philippines and Indonesia, the World Bank said in a paper released this month.
“Compared to Malaysia and Thailand, they are a little bit ahead of the Philippines because their cases have come down faster,” Rong said.
She also said that poverty in the Philippines could rise by 3.3 percentage points this year if the government fails to intervene. But Rong noted that the government has been providing social safety nets like the social amelioration program for poor families and subsidies for small businesses.
The World Bank warned that while global economic growth could rebound next year, the number of people living in extreme poverty is expected to remain unchanged after a huge surge this year due to the coronavirus pandemic.