ADB keeps Philippine growth outlook

MANILA, Philippines — Manila-based Asian Development Bank (ADB) is keeping its economic growth outlook for the Philippines at 4.5 percent this year amid a sea of downgrades in Southeast Asia due to the resurgence of COVID-19 cases.

In its Asian Development Outlook Supplement released yesterday, ADB said its gross domestic product (GDP) growth forecasts for the country remain at 4.5 percent and 5.5 percent for 2021 and 2022, respectively.

On the other hand, its GDP outlook for Southeast Asia has been slashed to four percent from 4.4 percent due to the reimposition of mobility restrictions amid sharply rising COVID-19 cases following the spread of the more contagious Delta variant.

However, ADB’s forecast is still way below the government’s target GDP growth of six to seven percent for this year, coming from a 9.6 percent contraction last year.

In Southeast Asia, ADB downgraded forecasts for Indonesia, Laos, Malaysia, Thailand, Timor Leste and Vietnam. It maintained projections for the Philippines, Brunei, Cambodia and Myanmar while it hiked the growth outlook for Singapore.

The multilateral lender noted that while GDP in the Philippines shrank 4.2 percent in the first quarter, this was still an improvement from the declines in the last four quarters.

“Sustained government spending on infrastructure and social assistance programs is supporting recovery, as did a gradual pickup in household spending aided by strong remittances,” ADB said.

“Private investment remained sluggish, but indicators such as purchasing managers’ index, industrial production, and imports improved gradually,” it said.

ADB also took note of the government’s accelerated vaccination program over the past months, which is now at 250,000 jabs daily.

“This is improving the prospects that community protection in metropolitan Manila could be achieved by year’s end,” ADB said.

Latest government data showed that some 15.1 million doses have been administered since vaccination started in March.

About 4.3 percent or 4.71 million Filipinos have been fully vaccinated, while those who were given at least one dose reached 10.34 million or some 9.5 percent of the population.

Further, ADB kept its inflation forecast at 4.1 percent, just slightly above the upper end of the Bangko Sentral ng Pilipinas’ target band of two to four percent. For the first semester, inflation has already averaged at 4.4 percent.

ADB is banking on the temporary measures undertaken by the government to augment food supply through the reduction of tariffs on rice and meat imports and allowing more pork imports under low-tariff minimum access volume terms.

Meanwhile, ADB slightly lowered its economic growth projection at 7.2 percent from 7.3 percent in April for developing Asia due to renewed virus outbreaks.

“Asia and the Pacific’s recovery from the COVID-19 pandemic continues, although the path remains precarious amid renewed outbreaks, new virus variants, and an uneven vaccine rollout,” ADB chief economist Yasuyuki Sawada said.

“On top of containment and vaccination measures, phased and strategic rejuvenation of economic activities—for instance, trade, manufacturing, and tourism—will be key to ensure that the recovery is green, inclusive, and resilient,” he said.

Daily confirmed cases in the region are at 109,000 while vaccination is at 41.6 doses administered per 100 people, above the global average of 39.2, but below rates of 97.6 in the US and 81.8 in Europe.