The World Bank has raised the economic outlook for the Philippines by one percentage point this year due to better-than-expect growth performance in the third-quarter.
Based on the latest Philippine Economic Update on Tuesday, Dec. 7, the Washington-based multilateral institution is now projecting that the country’s gross domestic product (GDP) may expand by 5.8 percent in 2021.
The new GDP projection is higher than an earlier estimate of 4.3 percent in September and above the interagency Development Budget Coordination Committee’s downward adjusted 4.0 percent to 5.0 percent target.
“This upward revision follows the official growth rate of 7.1 percent for Q3 2021, which exceeded the Bank’s projection of 4.8 percent,” World Bank said.
“Moving forward, the economic impact of the pandemic is expected to be less severe especially as the government implements its policy of phased economic reopening,” it noted.
With this prospect, the World Bank noted that the economy is projected to grow faster in 2022 until 2023 at an average of 5.8 percent.
Alongside the progress in vaccination, the bank said the domestic economy is expected to further reopen, allowing for a return of market confidence, and more dynamic economic activity.
Public investment is expected to be a key growth driver in the medium term as the government is expected to pursue its infrastructure investment agenda.
However, private investment is seen to remain tepid due to subdued lending and market uncertainty.
Barring new episodes of case resurgence and sudden hikes in inflation, household consumption is also projected to recover as remittances pick up and employment slowly improves.
“The global economy continues to recover, despite recently slowing, which will support exports and manufacturing activities,” the World Bank said.
“Nonetheless, the nearly two-year long pandemic has already resulted in the closures of firms and losses of jobs and incomes, alongside health insecurities and education disruptions. These will scar the country’s potential growth,” it added.
Meanwhile, Ndiame Diop, World Bank country director for the Philippines admitted that the new Omicron variant has added a layer of uncertainty, but economic reopening, along with progress in vaccination, is clearly strengthening domestic dynamism and market confidence.s
“As the recovery gains traction, it will be important to enhance private sector participation in the recovery by deepening current efforts to make the country’s business environment favorable to job creation while upskilling the workers so that they can benefit from new or emerging job opportunities,” Diop said.