World Bank: PH economy to start bouncing back by 2021
Metro Manila (CNN Philippines, December 9) — The economy is seen to grow again in 2021 after experiencing a deep recession this year, according to the World Bank.
The multilateral lender on Tuesday said the Philippines would register an economic growth of 5.9% next year and 6 percent in 2022.
The 2021 and 2022 forecasts, however, are below the government’s target of 6.5-7.5% and 8-10% respectively.
World Bank senior economist Rong Qian said their forecasts are based on the expectations that private consumption will pick up.
Their study assumed the government will slowly allow more industries to resume operations, which will revive jobs.
The Washington-based lender is also seeing “continuing improvements” in bringing down virus transmission in the Philippines.
“While addressing the pandemic, the country needs to sustain focus on the structural reform agenda,” Qian said on their latest Philippines Economic Update or PEU. “Speeding up reforms that improve the business environment, foster competition, and strengthen resilience against natural disasters will support the economic recovery and boost productivity growth in the long term.”
World Bank’s PEU also hinge on China’s early recovery, alongside the expected rebound in the global economy in 2021.
The PEU said this will allow for export growth to recover, and larger remittance inflows to stimulate domestic demand.
It added pre-election activities leading to the 2022 national election will give more boost to demand as early as 2021.
2.7 million more poor Filipinos
The World Bank report said the economy is expected to contract even deeper at 8.1% for the entire 2020.
In October, the bank's forecast was -6.9%, not yet factoring in the series of typhoons that hit Luzon
Typhoons Quinta, Rolly, and Ulysses battered Luzon, destroying agricultural lands and enterprises between October and November.
“The series of natural disasters that hit the country while we are battling the pandemic highlights the importance of mainstreaming disaster risk reduction and climate change adaptation into policy and planning,” said Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Thailand and the Philippines. “While the Philippines is financially resilient, stronger coordination, execution and implementation will help further improve social and physical resilience to frequent shocks.”
This also brings them to believe that 2.7 million more Filipinos will plunge into poverty at least in the next two years.
The World Bank is basing its poverty line on a $3.2 or roughly ₱150 daily per capita income for middle-income countries.
The bank’s economists said the COVID-19 pandemic, subsequent lockdowns, and the typhoons’ impact are causing job losses.
Fewer cash remittances from Filipino workers abroad are also making the situation harder for their families in the country.
The multilateral lender is seeing poverty to increase from 20.5% in 2019 to 22.6% in 2020.
More emergency cash aid for the poor
The World Bank suggested the government embark on more cash transfer programs for the poorest of the poor.
Qian said this will help families living in poverty sustain their food and other daily necessities in the time of crisis.
“This needs strengthening social resilience to ensure that households and society can cope with shocks when they do happen,” said Qian.
The government earlier initiated a series of Social Amelioration Programs for the poor by giving families P5,000 to P8,000.
The international bank is also cautioning policymakers to watch out for the possible second wave of COVID-19 pandemic.
Diop said this is what’s happening at the moment in the United States, European countries, and other nations.
He also said everyone must ensure government agencies are properly spending the 2021 budget on COVID-19 response.
“It is crucial that we all maintain vigilance and sustain improvements in collective efforts to test, trace, quarantine and practice social distancing,” added Diop.
