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A better outlook

The Asian Development Outlook 2021 Update by the Asian Development Bank retained its 2021 economic growth outlook for the Philippines at 4.5 percent and 5.5 percent for 2021 and 2022 respectively but warned of continued downside risks from more transmissible COVID variants that may lead to fresh spikes in cases and lockdown measures.

It is good news for the Philippines as ADB slashed its GDP outlook for Southeast Asia to 3.1 percent from 4 percent in July and 4.4 percent in its original outlook in April amid the Delta variant that slowed the region’s growth momentum.

The revised ADB forecast now falls within the government’s revised GDP growth target of 4 to 5 percent for the whole year. The economy is coming off a whopping 9.6 contraction last year.

Based on ADB projections, the Philippines is poised to register the third highest growth in the region, next to Singapore’s 6.5 percent and Malaysia’s 4.7 percent.

ADB Macroeconomics Research Division director Abdul Abiad said the huge economic contraction for the Philippines last year would allow a stronger bounce-back in 2021. “There’s been a focus on ensuring more rapid progress in vaccination in Metro Manila, which accounts for about 40 percent of GDP. Good vaccination in the capital allows more reopening and normalization that can help spur activity,” he said.

ADB is also banking on improved consumer confidence and rising remittances from overseas workers to support a continued recovery in household consumption. Employment is also seen recovering gradually with the implementation of granular lockdowns in areas with high cases, with widespread vaccination allowing restrictions to be eased further and for more businesses to operate.

While the economy is recovering, ADB said this remains fragile because of periodically tighter COVID-19 mobility restrictions, particularly in Metro Manila. Further, the multilateral lender emphasized that the main risk to the outlook is the spread of newer, more contagious variants which may result in the return of stricter containment measures and stall economic activity.

After more than 18 months of being stalled, economic recovery has to begin somewhere. The continuing vaccinations and changes in lockdown measures will hopefully allow the growth and development that have been severely stunted by the unfortunate combination of the COVID-19 pandemic an ineffective government response strategy. Hopefully the ADB is correct in projecting that economic recovery is finally at the horizon for the Philippines and our government can sustain the positive gains that have finally been made after so much time was wasted.*

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