MANILA - The World Bank on Tuesday raised its growth forecast for the Philippines this year to 5.3 percent from an earlier forecast of 4.7 percent made in June, following a stronger-than-expected recovery in the third quarter.
The multilateral lender also expects the Philippines’ gross domestic product to expand by an average of 5.8 percent in 2022 and 2023.
“Government spending on infrastructure is expected to buoy growth, aided by the steady progress in vaccination leading to greater people mobility and the revival of businesses,” the World Bank said in its latest Philippine Economic Update.
Barring a new uptick in COVID-19 cases, household consumption is projected to recover, anchored on rising remittances and improving incomes as more people regain or find new jobs, the Bank added.
Despite the emergence of the omicron variant, the World Bank struck an optimistic tone about the country’s recovery prospects.
“The new variant has added a layer of uncertainty but economic reopening, along with progress in vaccination, is clearly strengthening domestic dynamism and market confidence,” said Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.
The World Bank also noted that despite the 2 surges in infections and mobility restrictions earlier this year, economic activity has not been severely hampered.
“As a result, the economy expanded by 4.9 percent in the first three quarters of 2021, rebounding from a 10.1 percent contraction over the same period in 2020.”
The World Bank said boosting private sector growth can further strengthen recovery.
“As the recovery gains traction, it will be important to enhance private sector participation in the recovery by deepening current efforts to make the country’s business environment favorable to job creation while upskilling the workers so that they can benefit from new or emerging job opportunities,” Diop added.
This can be done with reforms that open more sectors to foreign investments, streamlining administrative procedures, and encouraging firms to adopt new technology, Diop said.
The Bank meanwhile also warned that new COVID variants, breakthrough cases, and waning vaccine efficacy have highlighted the complexity of economic reopening.
“Speeding up vaccination especially in areas outside the National Capital Region and sustaining the observance of health protocols including masking and maintaining social distancing are measures that remain important as the country navigates the challenges of reviving the economy,” said Kevin Chua, Senior World Bank Economist.
Philippine GDP expanded 7.1 percent in the third quarter, beating forecasts by analysts.
The unemployment rate meanwhile dipped to 7.4 percent in October.