MANILA, Philippines — The Asian Development Bank (ADB) has revised downward its economic forecast for the Philippines this year as the prolonged lockdown continues to stifle production.
The Manila-based multilateral lender joins other leading institutions such as the World Bank and global credit agencies in forecasting a deeper downturn for the country.
In a supplement to its Asian Development Outlook Update, the bank said the domestic economy is now expected to contract by 8.5 percent this year, faster than the projected decline of 7.3 percent made in September.
“GDP forecasts in 2020 are downgraded for Indonesia, Malaysia, and the Philippines as COVID-19 containment hampers economic recovery,” said ADB.
Specifically, ADB downgraded the gross domestic product (GDP) forecast for the Philippines because of the faster-than-expected decline in consumption and investment.
The economy contracted by an average of 10 percent in three quarters, reflecting diminished consumer and business activities during the pandemic.
ADB noted that with easing unemployment, the decline in household consumption likewise moderated to 9.3 percent in the third quarter from 15.3 percent in the second quarter but nonetheless remained high.
Fixed investment, meanwhile, fell by 36.5 percent in the second quarter and 37.1 percent in the third quarter.
Government consumption continued to increase but at a decelerated pace. Exports also contracted less than imports, mitigating GDP contraction.
However, ADB said growth expectations for 2021 was maintained at 6.5 percent, assuming that public investment picks up and the global economy recovers steadily.
Prices of consumer goods are now expected to grow at a faster pace of 2.5 percent on the average this year, which will be sustained in 2021.