The Philippine economy will grow by 4.7 percent this year, according to the World Bank, which revised down an earlier forecast of 5.5 percent growth for 2021 due to ongoing challenges associated with the coronavirus pandemic.
In its Philippines Economic Update released on Tuesday, the multilateral lender cut its 2021 gross domestic product (GDP) growth projection again from 5.5% in March and the 5.9% forecast given in January.
“The PEU notes that the resurgence of new COVID-19 cases and rising inflation have derailed the early signs of an economic rebound in 2021,” the World Bank said in a statement Tuesday as it released its update on the Philippine economy.
The World Bank anticipates that the government’s mass vaccination program will gain traction in the second half, boosting consumer and business confidence as well as domestic consumption.
“The growth prospects hinge on the country’s ability to manage the COVID-19 health crisis, the medium-term growth trajectory depends on effective pandemic containment delivery of mass vaccination and further loosening of mobility restrictions,” said Kevin C. Chua, a World Bank senior economist.
The World Bank reduced its growth forecast for next year to 5.9%(from 6.3% in March) and to 6% in 2023. This is still lower than the government’s 7-9% growth targets for 2022 and 6-7% growth targets for 2023.
The latest projections will bring the World Bank’s estimated growth for the Philippines to 5.7% over 2020-2029, but Mr. Chua said this is partly because 2021-2022 are coming from a low base last year.
Since the government’s fiscal space has narrowed with the sustained high expenditures and weak revenues, Mr. Chua said government spending should be efficient and targeted.