WB upgrades PH growth forecasts

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The World Bank became more optimistic about the Philippines’ economic performance as it revised its growth forecasts for this year and next.

According to the Washington-based agency’s Philippine Economic Update released yesterday, the economy is now projected to grow by 5.3 percent in 2021 and 5.9 percent in 2022, while the bank also forecasts 5.7 percent growth in 2023.

The figures have improved from its most recent projections in September of 4.3 percent and 5.8 percent for this year and next, respectively, during the release of the East Asia and Pacific Economic Update.

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The World Bank said government spending on infrastructure is expected to buoy growth, aided by the steady progress in vaccination leading to greater people mobility and the revival of businesses.

Barring a new uptick in COVID-19 cases, household consumption is projected to recover, anchored on rising remittances and improving incomes as more people regain or find new jobs, it added.

The latest report said the upward revision for the year follows the official growth rate of 7.1 percent for the third quarter, which exceeded the bank’s projection of 4.8 percent.

“We saw a second surge of the pandemic due to the Delta variant. Initially, we thought this would impact growth. But mobility wasn’t really hampered in the third quarter, and so this has really affected our forecast,” Kevin Chua, senior World Bank economist, said in a virtual briefing.

“The new variant has added a layer of uncertainty but economic reopening, along with progress in vaccination, is clearly strengthening domestic dynamism and market confidence,” said Ndiame Diop, World Bank country director for Brunei, Malaysia, Philippines and Thailand.

Moving forward, the report said the economic impact of the pandemic is expected to be less severe especially as the government implements its policy of phased economic reopening.

But the report said the nearly two-year long pandemic has already resulted in the closures of firms and losses of jobs and incomes, alongside health insecurities and education disruptions.

These, the World Bank said, will scar the country’s potential growth.

The report said without mitigation measures, the country faces weaker long-term growth potential through lower capital investment and loss of human and intangible capital.

“The pandemic will have an adverse impact on the economy, lowering the long-term growth potential to a projected 5.7 percent, on average, in 2020 to 2029, below the pre-pandemic estimate of more than six percent,” the World Bank said.

“The challenge is to limit the scarring by capitalizing on growth opportunities such as the acceleration of digitalization and implementing a catch-up plan to mitigate the adverse socio-economic impacts of the pandemic,” it added.

Meanwhile, the Federation of Filipino -Chinese Chambers of Commerce & Industry Inc. (FFCCCII) sees strong economic recovery next year with GDP forecasts to grow conservatively 6.5 percent, and optimistically at 7.5 percent.

This can be regarded conservative considering government forecasts a wide band of 7 to 9 percent GDP expansion in 2022.

Henry Lim Bon Liong, FFCCCII president, said the Filipino-Chinese business community pins its hopes on the strong economic fundamentals of the country, the prospects of a clean election in May and the continuity of reforms in making this growth forecast next year.

Lim said FFCCCII also hopes the next administration will continue bold socio-economic reforms: support for agriculture progress and food security; infrastructure modernization; upholding n independent foreign policy of befriending and trading with all the world’s big powers and; continued vigorous efforts to improve peace and order.

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