World Bank slashes 2021 growth forecast for PH, notes ‘high’ COVID transmission, ‘lagging’ vaccine rollout

Metro Manila (CNN Philippines, March 26) — The World Bank has downscaled its 2021 economic growth forecast for the Philippines.

The Washington-based lender on Friday (Manila time) announced a 5.5% growth projection for the country, down from the 5.9% it initially announced in December last year.

The Philippines, it noted has a “high domestic transmission” of COVID-19 and is “lagging behind” in its vaccine rollout.

The Philippines is also among the last countries in the region to start its vaccination drive, only rolling it out on March 1. The country also has one of the highest COVID-19 case tallies among ASEAN members, logging over 700,000 infections to date. It also broke its all-time high for daily cases recorded for the fifth time on Friday with nearly 10,000.

Another factor the World Bank pointed to is the country relying more on "prolonged restrictions on mobility rather than an effective test-based strategy."

While most parts of the Philippines are placed under the more relaxed modified general community quarantine (MGCQ), main economic hub Metro Manila has been placed in a stricter GCQ NCR Plus 'bubble' along with Bulacan, Cavite, Laguna, and Rizal for two weeks.

The multilateral lender also flagged the country's "conservative" fiscal stance, along with its under-spending due to weak implementation.

The government recorded a "modest" growth in expenditures as of January, which contributed to the reversal of the budget gap for the month into a fiscal deficit. Economists have counted on ramped up spending to prevent the domestic economy from deteriorating even more.

"[G]rowth is expected to recover in the medium term, contingent on an improved external environment, a successful vaccination program, and the loosening of movement restrictions," read the World Bank report.

The World Bank's 2021 economic growth forecast for the Philippines rests below the 6.5% to 7.5% forecast range eyed by the Development Budget Coordination Committee.

Still, it's status quo for the DBCC's projection for now, according to Acting Socioeconomic Planning secretary Karl Chua.

"Too early in the year to make changes," Chua told reporters about the committee's forecast, adding the body will always "look at the data to guide our projections."

The World Bank meanwhile raised its 2022 forecast for the Philippine economy to 6.3% from the previous 6%, but still below the 8-10% targeted growth by the DBCC. It notes economic output for the country, along with Thailand, is projected to stay below pre-pandemic levels for the year.

The Philippines remains in recession, with the economy tumbling by a record-low of -9.5% in 2020 as quarantine restrictions continue to dampen consumer and business activity.

CNN Philippines’ Lois Calderon and Melissa Lopez contributed to this report.