THE Philippine economy is expected to see better tides—thanks to low-base effects—which will allow a growth of 6 percent or better this year and next year, according to the United Nations (UN).
In the World Economic Situation and Prospects 2021, the Philippine economy is projected to post a 6.2-percent growth this year and 6 percent next year.
However, with higher growth, inflation is also expected to increase by 2.1 percentage points in 2021 and 2.8 in 2022.
“In many parts of the [East Asia] region, the pandemic has caused significant setbacks to social and economic development, with a disproportionate impact on the vulnerable segments of society,” the UN report stated.
“The region will see a recovery in 2021, but this will be from a low base and with great uncertainty stemming from the potential for renewed lockdown measures,” it added.
The UN said the economic performance of East Asian economies, including the Philippines, will largely depend on their “reliance on other external sources of income.”
This includes not only tourism but remittances. The UN said the Philippines and Vietnam are among the countries whose economies depended on remittances and account for 9 percent and 6 percent of GDP, respectively.
The UN said as migrant workers continue to face job losses and wage cuts, households in remittance-receiving countries could see their incomes decline.
From January to August 2020, the UN said Philippine remittance inflows contracted by 2.6 percent, a stark contrast to solid annual average growth in remittances of 4.1 percent over the past five years.
“The growth prospects of other economies in the region will largely depend on the strength of the global recovery, given their reliance on income from external sources, including tourism and remittances,” said Hamid Rashid, Chief of the Global Economic Monitoring Branch at the UN Department of Economic and Social Affairs, and the lead author of the report.
The UN also warned that the socioeconomic impact of the Covid-19 pandemic will be felt for years to come. This, until smart investments in economic, societal and climate resilience solutions are put in place to ensure a robust and sustainable recovery of the global economy.
East Asia is projected to recover from a low base, with growth rebounding to 6.4 percent in 2021, before moderating to 5.2 percent in 2022.
The UN said that in most economies, domestic demand will be supported by continued monetary and fiscal stimulus. These baseline projections, however, are highly contingent on the successful containment of the virus, both domestically and abroad.
China will remain the region’s main driver of growth, with GDP growth projected to rebound to 7.2 percent in 2021, from 2.3 percent in 2020. China’s economic recovery, however, is expected to be uneven across sectors.
While infrastructure investment is expected to rebound strongly, private consumption growth is likely to remain moderate.
“We are facing the worst health and economic crisis in 90 years. As we mourn the growing death toll, we must remember that the choices we make now will determine our collective future,” said UN Secretary-General António Guterres, who addressed the Davos Agenda on Monday.
“Let’s invest in an inclusive and sustainable future driven by smart policies, impactful investments, and a strong and effective multilateral system that places people at the heart of all socioeconomic efforts,” he added.
The report underscored that sustained recovery from the pandemic will depend not only on the size of the stimulus measures, and the quick rollout of vaccines, but also on the quality and efficacy of these measures to build resilience against future shocks.