The Asian Development Bank (ADB) downgraded its growth forecast for the Philippines as the nation struggled in containing the coronavirus outbreak that hampered economic recovery.
Based on ADB’s Asian Development Outlook update, the Manila-based multilateral institution has projected that the country’s gross domestic product (GDP) may contract by 8.5 percent this year, worse than its earlier estimate of 7.3 percent in September.
ADB said the COVID-19 “containment hampers economic recovery.” The local economy dropped by 10 percent in January to September, reflecting muted consumer as well as business activity and confidence under the pandemic.
The Duterte administration earlier further lowered its GDP outlook for 2020 following weaker than expected economic performance in the third-quarter.
The inter-agency Development Budget Coordination Committee (DBCC) revised its 2020 GDP assumption to -8.5 to -9.5% for this year due to “prolonged imposition of community quarantines in various regions in the country.”
ADB said unemployment rate remained high despite its deceleration from 10 percent in July to 8.7 percent in October.
Likewise, the lender noted that household consumption was also lower year-on-year, but the contraction has eased from 15.3 percent in second-quarter to 9.3 percent in the third-quarter as the economy gradually reopened and remittances from overseas workers rebounded.
Fixed investment, on the other hand, fell by 36.5 percent in April to June and 37.1 percent in July to September 2020.
“Government consumption continued to increase but at a decelerated pace. Exports contracted less than imports, mitigating GDP contraction,” ADB said in the report.
Meanwhile, ADB maintained its GDP forecast for 2021 at 6.5 percent growth on an assumption that public investment will pick up and the global economy recovers.
ADB’s economic outlook for next year is aligned with DBCC’s target of 6.5 percent to 7.5 percent.
Earlier, the World Bank said it also expects the Philippine economy will slip deeper than its initially estimated, but the level of contraction will be less severe than the Duterte administration’s projection.
In its latest Philippine Economic Update, the Washington-based financial institution, said the COVID-19 pandemic delivered a triple shock to the country that could drag-down its local economy by as much as 8.1 percent this year.
The World Bank’s latest economic projection is a revision from its 6.9 percent contraction estimate in October, but better than the government’s new forecast range of -8.5 percent to -9.5 percent.
World Bank lowered its growth forecast on expectations of heavier impacts of the ongoing health crisis, strict containment measures, and unprecedented scale of global recession on the Philippines.
The economy slipped into recession in the first half of 2020 for the first time since 1991.