The growth of the Philippine economy is likely to be sharply tempered this year, weighed by the effects of the enhanced community quarantine to curb the coronavirus outbreak.
The Asian Development Bank, in its annual flagship economic publication Asian Development Outlook 2020, said it projects the Philippines’ gross domestic product (GDP) to grow at only 2 percent this year as compared with the 6 percent recorded last year.
However, growth is expected to jump to 6.5 percent next year, assuming that infections in the country are curbed by June.
“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,” said Kelly Bird, ADB country director for the Philippines.
“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,” he added.
The quarantine measures have prompted most businesses to temporarily shut, and driven most people to stay and work from home. Public transportation was also suspended to severely limit the movement of people.
Metro Manila and the entire Luzon region account for more than half of the Philippines’ total population and generate over two-thirds of the country’s overall GDP.
Bird said that the Manila-based lender is working closely with the Philippine government to fight the impact of the virus on Filipinos through a total of $8-million grant to the said country. This included an initial amount of $3-million in mid-March, followed by a $5-million grant this week to provide food supplies for the poorest families in Metro Manila.
Bird said that ADB is now in preparations for another round of assistance, deemed “larger and comprehensive” to help alleviate the impacts of the pandemic on communities’ well-being and support fiscal stimulus.
For next year, the ADB said growth will be driven by public investments, particularly by the government’s ambitious infrastructure program called “Build, Build, Build”, coupled with a rebound in private consumption.
“The economy will also benefit from the government’s large-scale fiscal spending to boost the delivery of relief measures to vulnerable sectors affected by the pandemic,” the ADB said.
For this year, the Philippines’ inflation figure is expected to settle at 2.2 percent and 2.4 percent next year, with further downside pressure from lower global oil prices.
“With inflation projected to remain within the central bank’s target range of 2 to 4 percent, authorities have room for further monetary policy expansion to cushion any lingering effects of the pandemic on the economy,” ADB said.
PHOTO COURTESY: ASIAN DEVELOPMENT BANK
