CEBU CITY—The Asian Development Bank (ADB) foresees a slower economic growth for the Philippines this year but projects a strong rebound in 2021.
The ADB made this pronouncement in a new ADB report released today Friday, April 3, 2020, according to a news release posted on ADB Philippines website.
In the Asian Development Outlook (ADO) 2020, ADB projects a 2.0 percent growth of the country’s gross domestic product (GDP) in 2020 following an ‘enhanced community quarantine’ imposed in March to contain the spread of the coronavirus disease 2019 (COVID-19).
Strong recovery
ADB expects that the Philippine economy will experience strong recovery up to 6.5 percent GDP growth in 2021, ‘assuming that COVID-19 infections in the country are curbed by June this year.’
“This unprecedented and extraordinary public health emergency brought about by the COVID-19 pandemic will substantially slow down economic growth this year, with most of the contraction in the economy occurring in the second quarter,” according to Kelly Bird, ADB country director.
“We are anticipating a bounce back starting in the second half of this year, supported by the government’s stimulus spending and easier monetary policies,” Bird added.
$8M ADB grants
He noted that ADB had been working closely with the Philippine government in its fight to ease the impact of the COVID-19 pandemic on Filipinos.
“We have provided two grants totaling $8 million to assist the government and we are now in advanced stages of preparing a larger and comprehensive assistance to help alleviate the impacts of the pandemic on communities’ well-being and support fiscal stimulus,” he said.
Last March 14, the ADB approved a $3 million grant to help the government deliver the much-needed emergency medical supplies and equipment, including a new laboratory to enhance the country’s capacity to conduct more COVID-19 tests.
The ADB also launched a $5-million project to provide critical food supplies for poor families in Metro Manila.
Despite this year’s economic slowdown, ADB sees the Philippines’ GDP to post robust growth next year.
“Sustained public investment—especially in priority projects under the government’s “Build, Build, Build” (BBB) infrastructure development program—and a rebound in private consumption will drive economic growth in 2021,” the report says.
The government’s large-scale fiscal spending to boost delivery of relief measures to vulnerable sectors affected by the pandemic will boost the economy, it added.
Inflation rate
The inflation rate this year and in 2021 is also projected to remain within the 2.0 percent to 4.0 percent targeted by Bangko Sentral ng Pilipinas, which would provide authorities room for further monetary policy expansion to cushion any lingering effects of the pandemic.
“Inflation is expected to reach 2.2 percent this year and 2.4 percent in 2021, with further downside pressure from lower global oil prices,” according to the ADB report.
The ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region./dbs