The Asean+3 Macroeconomic Research Office (AMRO) expects the Philippine economy to grow by 6.4 percent this year, but cited two main short-term risks — a prolonged wave of coronavirus disease 2019 (COVID-19) infections and potential financial distress in the business sector.
AMRO’s projection, as released in its 2020 annual consultation report published yesterday, falls within the government’s six to seven percent outlook for the year.
However, the organization’s forecast has been revised downwards from the 6.9 percent estimated in April.
For 2022, AMRO sees the economy growing by 6.8 percent.
“The Philippine economy is recovering from its deepest ever recession in 2020, but given the resurgence in COVID-19 infections, economic recovery will only be sustained through a quicker rollout of vaccinations, the implementation of targeted containment measures, as well and continued injection of stimulus,” AMRO said in a statement.
“The resurgence of infections since March has weakened the recovery momentum and significantly raised the downside risk to these baseline forecasts,” it added.
AMRO said economic activity in the Philippines has started to pick up since the second quarter of 2020.
“Since then, the economy has continued to gain momentum, but significant slack remains, as indicated by the high unemployment rate of 7.1 percent as of March 2021,” AMRO said.
“A speedy and robust economic recovery is essential to absorbing displaced workers, but the economy can only improve if the COVID-19 pandemic is well contained, such that the economy can reopen fully and business confidence is restored. The government should therefore continue providing strong policy support,” it added.
AMRO said the two main short-term risks — a prolonged wave of COVID-19 infections and potential financial distress in the business sector — could lower potential growth, owing to the scarring effects of the pandemic in the medium- to long-term.
“The Philippines started vaccinating its population against COVID-19 in early March 2021.
While the government may have secured enough vaccination doses, uncertainties over the timing of delivery and administration remain,” AMRO said.
“Meanwhile, the number of new infections is still high, further delaying the reopening of the economy. These factors will constrain the country’s pace of economic recovery,” it added.
AMRO said for the population to achieve herd immunity, a faster rollout of vaccinations is essential, supported by more targeted containment measures. – Angela Celis
