MANILA - The Asian Development Bank on Wednesday kept its growth outlook for the Philippine economy for 2021 while downgrading the forecasts for Southeast Asia and the rest of developing Asia.
The Philippines' gross domestic product is expected to grow 4.5 percent in 2021 and 5.5 percent in 2022 buoyed by sustained growth in public spending, improving customer confidence as well as progress in the vaccination program, the lender said in a statement.
“The economy has regained its footing and is on the right growth path. But the recovery remains fragile due to the threat posed by more infectious COVID-19 variants,” said ADB Philippines Country Director Kelly Bird.
“Vaccination remains key to the economy’s safe reopening. We are actively supporting the government’s efforts to achieve its national vaccination targets through our health-related assistance.”
Remittances have been stable while the business process outsourcing has provided another source of steady income for the country, the ADB said.
There is also "good progress" in the vaccination in the National Capital Region (NCR), ADB Senior Regional Cooperation Officer Dulce Zara said in a virtual briefing.
"The hope is activity will slowly begin to reopen slowly here, and provide a boost to GDP growth in the Philippines,” Zara added.
Risks, however, remain due to the more contagious and new variants of COVID-19, ADB said.
Based on the updated Asian Development Outlook (ADO) 2021, the ADB also trimmed its growth forecast for developing Asia to 7.1 percent from 7.3 percent in April.
“Developing Asia remains vulnerable to the COVID-19 pandemic, as new variants spark outbreaks, leading to renewed restrictions on mobility in some economies,” said ADB Acting Chief Economist Joseph Zveglich, Jr.
The downgrade was due to new COVID-19 variants, local outbreaks, reinstatement of restrictions and lockdowns and slow and uneven vaccine rollouts, ADB said.
Southeast Asia's forecast was also cut to a potential growth of 3.1 percent, lower than the previous 4.4 percent outlook in April, the lender said.
Indonesia, Malaysia, Thailand and Vietnam all saw their growth forecasts reduced with Vietnam suffering from the biggest cut, with a forecast now at 3.8 percent from 6.7 percent, the ADB said.
"It is still a very fragile recovery, and most countries still need support on both fiscal and monetary side," ADB's Director for Macroeconomic Research and Regional Cooperation Department Abdul Abiad said.
Forecast for Singapore, meanwhile, was raised to 6.5 percent from 6 percent, it added.
The Philippine economy contracted by 9.6 percent in 2020, its worst since the end of World War 2, due to the COVID-19 pandemic, revised data showed.
In the first quarter of 2021, the revised data also showed it contracted at a slower rate of 3.9 percent while it emerged from recession in the second quarter after a growth of 11.8 percent.
The second-quarter growth is the highest since the fourth quarter of 1988 but the high growth figure takes into account the low base effects, as the economy contracted by a record 17 percent in the second quarter of 2020.