THE Asian Development Bank (ADB) has revised upward its outlook for the growth of the Philippine economy in 2021 and 2022 due to improved investments, infrastructure spending, and consumer confidence.
In its Asian Development Outlook (ADO) Supplement, ADB said growth is now projected to reach 5.1 percent in 2021, higher than its 4.5-percent forecast in September.
For 2022, ADB estimates that the Philippine economy will post a growth of 6 percent, better than the 5.5-percent projection the Manila-based multilateral development bank made three months ago.
“The Philippine economy has shown impressive resilience,” said ADB Philippines Country Director Kelly Bird. “Growth momentum has clearly picked up on the back of the government’s vigorous drive to vaccinate Filipinos against the COVID-19 virus. Public spending on infrastructure and continued vaccination of the population will help the country further accelerate its recovery in 2022.”
Apart from growth, ADB also raised its inflation expectations for the Philippines on the back of more expensive oil prices. International pump prices are still hovering at $70 per barrel.
ADB said inflation is expected to average 4.4 percent in 2021, higher than its estimate of 4.1 percent in September this year.
For 2022, inflation is now projected to average 3.7 percent. This is 2 percentage points higher than the 3.5 percent forecasted by ADB in September.
“Inflation in Southeast Asia is expected to remain subdued in 2021 despite inflationary pressure starting to rise in the Philippines, Singapore, and Thailand as economic reopening spurs demand,” the report stated. “Inflation forecasts for the Philippines in 2021 and 2022 are adjusted upward mainly on rising fuel prices.”
The ADO Supplement noted that the Philippine economy’s growth in the three quarters of the year was 4.9 percent, reversing the 10.1-percent contraction in the same period in 2020.
The Manila-based multilateral development bank said growth in the past three quarters was driven by household consumption and investments. Private investment bounced back and the government’s Build, Build, Build program accelerated.
ADB said industry and services also recovered. However, agriculture contracted as pork production fell on the back of continued infections of African Swine Fever (ASF).
“Consumer and business confidence improved steadily in Q4 (fourth quarter) 2021 on acceleration in the government’s vaccination program, a sharp drop in new Covid-19 cases, and further reopening of the economy,” ADB said.
These are being driven by the increase in vaccination in the country which has allowed the economy to slowly reopen, boosting consumer and business confidence.
More than 57 million Filipinos, or nearly 65 percent of the target for vaccination, have received at least one Covid-19 vaccine dose as of December 8, 2021.
In addition to the government’s purchases of Covid-19 vaccines, the World Health Organization-supported Covid-19 Vaccines Global Access (Covax) facility also donated supplies for the country’s nationwide vaccination program.
ADB has been helping the government in procuring Covid-19 vaccines. It provided $425 million in total financing through the Health System Enhancement to Address and Limit Covid-19 under the Asia Pacific Vaccine Access Facility (HEAL) and HEAL2 programs.
These loans helped fund nearly half of the country’s vaccine supply purchases for 2021. On December 13, 2021, ADB approved $250 million in additional financing under HEAL 2 to help the government procure more Covid-19 vaccines for minors and booster shots for adults.
