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World Bank turns gloomier as Philippines’ virus fight returns to square one
MANILA, Philippines — The World Bank slashed anew its growth forecast for the Philippines, as emerging signs of recovery seen in previous months dissipate in the face of fresh coronavirus lockdowns.
From its old forecast of 5.5% in March, the Washington-based lender now projects the economy to grow 4.7% this year based on the revised version of its “Philippines Economic Update” report released Tuesday. Last year, the economy shrank a record 9.6% year-on-year.
If realized, the bleaker projection would fall below the Duterte administration’s watered-down target of 6-7% for 2021. To make matters worse, the lender said elevated inflation driven by food supply problems has also emerged as a “key challenge” for the economy. A new World Bank poll found two in five Filipino families were worried about food and healthcare access due to lack of income.
“The resurgence of COVID-19 cases and reimposition of more stringent quarantine measures held back the early signs of an economic rebound,” the Bank said in its report.
The gloomy outlook was not surprising at all. Following a sudden and deadly coronavirus surge, the government retightened restrictions in Metro Manila and four surrounding urbanized areas from late March to mid-April, crippling anew the economy’s major growth engines. The harsh, but necessary, step dealt a fresh blow on consumer confidence, all while mass vaccinations, promised to start early, have been pushed back to late second quarter.
So far, the Duterte administration has barely inoculated 5% of the population.
As it is, the damage has already been done and help from government during the brief lockdown period was deemed too little, too late by observers. In the first quarter, the economy remained in recession after collapsing at an annualized 4.2%, enough to convince World Bank Senior Economist Kevin Chua that the road to recovery would remain “fragile and challenging”.
A targeted government spending, Chua said, should facilitate recovery to ensure that additional debt burden incurred by the state is going to the right programs that can actually jumpstart economic activity.
“Social programs, including cash transfers, can help alleviate food and subsistence conditions. National and local government authorities need to coordinate their efforts to ensure timely and efficient deployment of these programs,” Chua told reporters in a virtual press conference.
“As the economy recovers, we can see debt ratio go down. Given we’ve borrowed money, it’s important expenditures are efficient and targeted,” he added.
A slower growth this year could translate to a faster rebound in 2022. The World Bank penciled in a 5.9% growth next year, albeit slower than its previous projection of 6.3% and the government’s 7-9% goal.
Growth is seen returning to pre-pandemic level of 6% in 2023 when a new government would have taken over.
Source: https://www.philstar.com/business/2021/06/08/2103976/world-bank-turns-gloomier-philippines-virus-fight-returns-square-one