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Amid a weak recovery in consumer spending and confidence, the Asian Development Bank (ADB) further lowered its outlook for the Philippines, saying the economy will see a steeper 8.5 percent decline this year.
The Manila-based lender’s latest forecast contained in its Asia Development Outlook Supplement report for December 2020 released on Thursday showed less optimism than last September’s projection of a 7.3 percent drop.
Among multilateral institutions, the ADB’s projected decline in the Philippines’ gross domestic product (GDP) was the largest, compared to 8.3 percent and 8.1 percent for the International Monetary Fund and the World Bank. based in Washington, respectively.
The ADB attributed its lowered 2020 GDP forecasts for the Philippines, Indonesia and Malaysia to its strict COVID-19 containment measures, which have been hampering economic recovery.
In the case of the Philippines, the ADB noted that “household consumption and investment have fallen more than expected” along with the fall in GDP averaging 10 percent from January to September. The larger-than-expected contraction in GDP at the end of September reflected “moderate activity and confidence from consumers and businesses under the pandemic,” the ADB said.
A GDP contraction of 8.5 percent this year would be the worst economic recession the country would have in the postwar period. Still, this would be on the lower end of the government’s projection of 8.5-9.5 percent.
For 2021, the ADB maintained its GDP growth forecast of 6.5 percent, “assuming that public investment picks up and the world economy recovers.” The government aims to expand from 6.5 to 7.5 percent next year.
On inflation, the ADB slightly raised its 2020 forecast for the Philippines to 2.5 percent from 2.4 percent previously. The inflation projection for 2021 remained 2.6 percent higher.
In a separate report also Thursday, UK-based Oxford Economics said the Philippines was among the countries that would suffer the worst post-COVID-19 scars.
Oxford Economics chief economics officer for India and Southeast Asia, Priyanka Kishore, projected that the Philippines’ GDP in 2025 would be 8 percent lower than the estimated level had the pandemic not occurred.
Last month, Oxford Economics assistant economist Makoto Tsuchiya told the Inquirer that they expected the Philippine economy to contract by as much as 9.9 percent this year. INQ
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