AMRO slashes 2021 growth outlook for Philippines

Regional economic think tank ASEAN+3 Macroeconomic Research Office (AMRO) trimmed down its economic growth forecast for the Philippines in 2021 as the country struggles to contain the spread of COVID-19.

In its latest ASEAN+3 Regional Economic Outlook 2021 report, AMRO estimated that the Philippine economy will grow by 6.9% this year, a downgrade from its earlier forecast of 7.4%.

The regional think tank’s outlook, however, falls within the government target band of 6.5% to 7.5% for 2021.

ASEAN+3 refers to the 10 members of the Association of Southeast Asian Nations - Philippines, Brunei, Cambodia, Laos, Vietnam, Myanmar, Thailand, Cambodia, Indonesia, and Singapore - together with its neighbors China, Japan, and Korea.

“In the short term, it's those pandemic-related risks that are so important. We cannot expect the economy to strongly recover until the virus is under control,” AMRO economist and lead author Anne Oeking said.

“What's going to be important now is targeted containment, containment that's decisive, effective and proactive as far as possible, and the speedy rollout of vaccines that are accessible and acceptable,” Oeking said.

Sought for comment, Acting Socioeconomic Planning Secretary Karl Chua said, “It's within our target range.” He did not elaborate.

New COVID-19 cases saw a dramatic increase, hitting all-time highs in the last few weeks.

The surge in new cases has prompted the government to place Metro Manila, Bulacan, Cavite, Laguna, and Rizal under enhanced community quarantine from March 29 to April 4.

The reimposition of the strictest quarantine classification in the country’s economic center further dims hopes of a faster recovery from the pandemic-induced recession experienced last year.

In 2020, the country’s gross domestic product contracted by 9.5%, its worst performance on record since the end of World War II due to mobility restrictions and business activity disruptions in bid to contain the spread of COVID-19.

Despite the downgrade, AMRO places the Philippines in the third spot in terms of its economic growth forecast for 2021, well behind China at number one with an estimated 8.7% growth and Vietnam with a forecast growth of 7%.

“The Philippines was hit hard in 2020. It's a domestic demand and services driven economy so it was heavily disrupted from the lockdown measures last year. And what we saw was with easing of measures, remittances still flowing in, and policy support, the economy has started to rebound,” Oeking said.

“For this year, we actually expect that the growth rate will be one of the better ones in the region. Having said that, a large part of that is the base effect because 2020 was so weak, and that does not mean that output losses will be recovered this year,” she added. — RSJ, GMA News