Multilateral lender Asian Development Bank (ADB) kept its gross domestic product (GDP) outlook for the Philippines that indicates the economy is on its way to recovery.
“Growth forecasts are maintained at 4.5 percent in 2021 and 5.5 percent in 2022 as recovering domestic demand and improving global trade align with the forecasts from April,” ADB said in its latest report.
ADB country director for the Philippines Kelly Bird said the country is already on the “right growth path,” but vaccination remains the key factor in sustaining such momentum.
“The economy has regained its footing and is on the right growth path. But the recovery remains fragile due to the threat posed by more infectious Covid-19 variants,” Bird said.
“Vaccination remains key to the economy’s safe reopening. We are actively supporting the government’s efforts to achieve its national vaccination targets through health-related assistance,” he added.
Still, ADB recognized the country’s vaccination drive has picked up pace in the previous months, making “good progress” towards meeting the government’s target for the end of the year.
The country’s top economic managers expect GDP in 2021 to average between the four to five percent range.
Continued fiscal support
Abdul Abiad, director for macroeconomic research at the ADB, said the growth forecast for the Philippines is largely driven by the continued fiscal support from the government.
“Our predictions for the Philippines are driven by continued fiscal support, including steady infrastructure spending,” Abiad said.
He noted the higher vaccination rate in the country can help boost economic activity as the government can slowly open up and renormalize current conditions.
ADB senior regional cooperation officer, Dulce Zara shared the same sentiment as she explained the upcoming elections to not have any major impact on their outlook.
“We don’t see a major impact on the outlook, simply because the economy is on track to recovery and it just seems to be ramping up next year with the investments in infrastructure,” Zara said.