The Asian Development Bank (ADB) maintained the economic growth forecasts for the Philippines driven by the government’s infrastructure projects, renewed consumer spending and vaccination program.

In the September update of the ADB’s flagship economic publication, the Manila-based multilateral institution kept its gross domestic product product (GDP) projections for the country at 4.5 percent this year and 5.5 percent in 2022.

ADB’s growth estimate for the year is within the government’s target band of 4.0 percent to 5.0 percent, but the 2022 projection is lower than President Duterte’s goal of 7.0 percent to 9.0 percent.

“The Philippines’ economic growth in 2021 and 2022 will be supported by sustained growth in public infrastructure spending, improving consumer confidence, and progress in the national coronavirus disease (COVID-19) vaccination program,” ADB said.

The bank also took note signs of a gradual recovery in the country’s economy, with the upturn in domestic demand and favorable external trends.

However, ADB cited a risk to its outlook—the spread of newer, contagious COVID-19 variants, which may result in the return of stricter containment measures and stall economic activity.

“The economy has regained its footing and is on the right growth path. But the recovery remains fragile due to the threat posed by more infectious COVID-19 variants,” Kelly Bird, ADB Philippines country director said.

“Vaccination remains key to the economy’s safe reopening. We are actively supporting the government’s efforts to achieve its national vaccination targets through our health-related assistance,” he added.

The government has focused on vaccinating Filipinos living in main urban areas such as Metro Manila, which recorded the highest incidences of COVID-19 cases.

As of Sept. 15, 84 percent of Metro Manila residents aged 18 and older, or 8.2 million people, have received at least one dose of a COVID-19 vaccine, and 63 percent have been fully vaccinated.

Overall, as of mid-Sept., 22 million people nationwide had received a first jab and 17.7 million were fully vaccinated.

Meanwhile, public infrastructure disbursements rose 39.1 percent year-on-year in July, and the government is on track to achieve its target of raising infrastructure spending to at least 5.0 percent of GDP in 2021 and 2022, up from 4.8 percent in 2020.

“The economic recovery will be boosted by the government’s policy reforms and expansionary fiscal program, with a fiscal deficit of 7.5 percent of GDP expected in 2022,” the report said.

The National Employment Recovery Strategy adopted by the government in June 2021 focuses on recovery in quality jobs, upskilling workers, expanding social protection and active labor market programs.

Among the government’s priority policy reforms are proposed legislations to improve the investment climate.

Meanwhile, ADB’s inflation forecasts are also unchanged at 4.1 percent in 2021 and 3.5 percent next year.

“With inflation expected to fall back within the central bank’s two percent to four percent target range and a gradual recovery in domestic demand, the government’s monetary policy stance is expected to stay accommodative,” ADB said.

Moreover, the report said the country’s current account surplus will narrow to a revised 1.0 percent of GDP this year and 0.8 percent in 2022, with a stronger-than-expected rebound in imports, including for capital goods and raw materials.

“A pickup in merchandise exports, as well as receipts from business process outsourcing and higher remittances from Filipinos overseas, will help lift the current account,” ADB said.