The World Bank expects a deeper economic downturn in the Philippines this year due to uncertain prospects as the still uncontrolled coronavirus pandemic will certainly take a heavier toll on poverty.
Based on October 2020 Economic Update for East Asia and the Pacific, Washington-based multilateral financial institution is now projecting that the Philippines’ gross domestic product (GDP) would shrink by 6.9 percent in 2020.
World Bank is also not ruling out a scenario where the Philippine economy contracts by 9.9 percent this year. The lender had forecasted in June that the country’s GDP would decline by 1.9 percent only.
“Indonesia and the Philippines face uncertain prospects. The region’s two most populous countries after China have not so far succeeded in controlling the pandemic,” the World Bank report stated.
According to the Work Bank, the continued surge in COVID-19 infections in the Philippines worsens the already sizeable informal sectors and large number of people living in poor conditions in the country.
The Philippines’ exposure to global trade, tourism, and remittances will also deepen the negative effects of the government’s cycle of repeated strict lockdowns and reopenings, the World Bank noted.
“Because of both domestic and external conditions, faces the prospect of an uneven and volatile economic recovery,” which threatens the nation’s recent economic and social gains, the bank said.
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Meanwhile, Ndiamé Diop, World Bank country director for the Philippines said that recovering from the pandemic requires immediate and effective public health management and social protection measures.
“In the short-term, every peso put directly in the hands of poor and vulnerable families through social assistance translates into demand for basic goods and services in local communities, which in turn supports micro and small enterprises and the government’s recovery efforts,” Diop said.
“At the same time, one cannot over emphasize the importance of improvements in public health management including testing, tracing, isolating, and treatment to effectively control the spread of COVID-19 and secure a definitive recovery,” he added.
However, World Bank expects the Philippine economy would rebound to 5.3 percent next year and 5.6 percent in 2022.
“ a drawn out process that could slow down the country’s rapid progress in poverty reduction in recent years," World Bank said.
In the first half of 2020, the Philippine economy shrank by 9.0 percent, the largest contraction since 1985, due to the implementation of strict quarantine measures.
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