THE PHILIPPINE economy shrank deeper than expected in 2020, the International Monetary Fund said ahead of the release of official government figures.
The global lender said gross domestic product likely plunged by 9.6 percent last year due to the pandemic, deeper than the state’s current forecast of a -8.5 percent to -9.5 percent contraction.
Not all business establishments managed to survive the COVID-19 crisis, forcing small and even big firms to temporarily close or shut down for good to cut losses 10 months into local lockdowns.
The IMF pegged the contraction at -8.3 percent in October, but Yang said the deeper than expected decline in July-September at 11.5 percent – versus market projections at a softer 9 percent – led to the weaker forecast.
The lender, however, sees a growth rebound to 6.6 percent this year and 6.5 percent in 2022. The push will come from fresh infrastructure investments and private sector recovery, owing to a low interest rate regime plus a global economic rebound.
“The strength of the recovery is projected to vary significantly across countries, depending on access to medical interventions, effectiveness of policy support, exposure to cross-country spillovers, and structural characteristics entering the crisis,” the IMF report read.
To ensure a strong and sustained recovery, the Washington-based institution said there should be supportive policy responses to raise potential output as well as inclusive growth and lower carbon dependence. However, there are “lingering concerns” over surging infections, renewed lockdowns, and issues on vaccine rollouts.
“The Philippines has benefited from a steady flattening of the infection curve since end-September 2020. We understand that the Philippine authorities have been making every effort to prepare for a vaccine rollout,” Yang said, zooming in on the country level.
“However, like in most other countries, vaccination is a gradual process and social distancing will persist in 2021. Overall, we expect a robust recovery in 2021-22 – as shown by numbers above, with progress on vaccination and a steady reopening of the economy,” he added.
Output from the ASEAN-5 – composed of the Philippines, Indonesia, Malaysia, Thailand, and Vietnam – contracted by 3.7 percent last year before growing by 5.2 percent this year. Emerging and developing Asia is seen to reverse a 1.1 percent decline in 2020 and expand by 8.3 percent in 2021, according to IMF estimates.(CNN)
