The World Bank has slashed its Philippine growth projection for this year due to a deeper-than-expected contraction in the first quarter and the reimposition of stricter quarantine measures in the capital region to contain a surge in COVID-19 cases.
While growth in the Philippines remains on track for recovery, the bounce back this year will likely be lower than previously expected at 4.7%, Kevin Chua, World Bank senior economist, told a media briefing.
The World Bank’s forecast was cut from its previous projection of 5.5% and compares with the Philippine government’s 2021 growth target of 6.0%-7.0%.
The economy contracted by a record 9.6% last year.
Chua flagged a host of “significant downside risks” to the World Bank’s outlook, including the resurgence of infections due to new COVID-19 variants and extended mobility restrictions.
The Southeast Asian country is battling one of Asia’s worst coronavirus outbreaks with more than 1.27 million cases recorded and nearly 22,000 deaths.
A new surge in cases starting in March had prompted the reimposition of stricter mobility curbs in the capital region and nearby provinces, but new cases have come off a peak, allowing for some restrictions to be eased.
Philippine authorities are banking on a steadier flow of vaccine deliveries in the second half to ramp up its immunization drive to allow a further reopening of the economy and more people to return to work.
The unemployment rate climbed to 8.7% in April, equivalent to more than 4 million jobless people, from 7.1% in March, government data showed.
The World Bank also lowered its growth forecast for the Philippines for next year and in 2023 to 5.9% and 6.0%, respectively, from the 6.3% and 6.2% estimates it announced in March.
“The key policy challenges are to manage the pandemic, effectively deliver social protection and mobilise sector participation in the recovery,” Chua said.
