The Asian Development Bank on Tuesday upgraded its growth forecasts on the Philippines, citing the economy’s “impressive resilience” during the onslaught of the Delta variant.
In an update to its “Asia Development Outlook” report, the Manila-based lender now expects its host country to grow 5.1% this year, better than its previous projection of 4.5%.
If realized, ADB’s new forecast would beat the government’s own growth target of 4-5% for this year. In 2022, the Bank sees gross domestic product expanding at 6%, higher than their old forecast of 5.5%.
In Southeast Asia, which is projected to grow 3% on average in 2021, only the Philippines, Singapore and Thailand were given better growth outlooks by ADB after these economies’ GDP “surprised on the upside” in the third quarter. Growth forecasts for the rest of the region were retained.
But the Philippines would grow slower compared to the broader developing Asia with 46 economies, which is seen growing at an average of 7% this year from the old prediction of 7.1%.
“Consumer and business confidence improved steadily in Q4 2021 on acceleration in the government’s vaccination program, a sharp drop in new COVID-19 cases, and further reopening of the economy,” ADB said in its report. “Growth forecasts are therefore raised substantially.”
At home, GDP grew 7.1% on-year last quarter despite renewed lockdowns triggered by the Delta variant, beating most economists’ projections. The faster-than-expected growth in the third quarter brought the year-to-date figure to 4.9%, which boosted the government’s hopes that it would hit, or even exceed, the high-end of its target for 2021.
“The Philippine economy has shown impressive resilience,” Kelly Bird, country director at ADB, said.
“Public spending on infrastructure and continued vaccination of the population will help the country further accelerate its recovery in 2022,” Bird added.
The ADB is the latest institution to turn bullish on the Philippines. The World Bank last week also upgraded its outlook on the country on expectations that some issues, such as the transition to digitalization and employment, were addressed by the national government.
In the same report, ADB said inflation in Southeast Asia is expected to “remain subdued” this year despite inflationary pressure starting to rise in the Philippines, Singapore and Thailand as economic reopening spurs demand. The Bank projects inflation to average 4.4%, settling above the government’s 2-4% annual target due to rising fuel prices. Government data showed 11-month inflation stood at 4.5%.
It is only next year when ADB sees consumer price growth returning to target at 3.7%.