ADB upgrades Philippine growth projections at 5.1% for 2021, 6% for 2022

Manila-based multilateral lender Asian Development Bank (ADB) on Tuesday upgraded its economic growth projections for the Philippines for 2021 and 2022, as it banks on the accelerated vaccination drive alongside declining COVID-19 cases.

In the December update to its flagship economic publication, Asian Development Outlook (ADO) 2021, the ADB said the Philippines is projected to grow 5.1% this year and 6% next year.

This is an upgrade from the 4.5% and 5.5% growth forecast for 2021 and 2022

The lender said the Philippine economy is seen “to remain on a steady growth path in 2021 and 2022, supported by an acceleration in the government’s coronavirus disease (COVID-19) vaccination program and a sharp drop in COVID-19 cases.”

“The Philippine economy has shown impressive resilience,” said ADB Philippines country director Kelly Bird.

“Growth momentum has clearly picked up on the back of the government’s vigorous drive to vaccinate Filipinos against the COVID-19 virus. Public spending on infrastructure and continued vaccination of the population will help the country further accelerate its recovery in 2022,” Bird said.

The economy, as measured by gross domestic product (GDP)—the total value of goods and services produced in a country in a specific period—grew 7.1% in the third quarter, a reversal from a contraction of 11.4% in the same period last year, albeit lower compared to the 12% growth posted in the second quarter of 2021.

The July to September GDP print brought the year-to-date growth to 4.9%, within the upper end of the government’s downwardly revised target band of 4% to 5% for the entire 2021.

The bank said vaccination has allowed the Philippine economy to slowly reopen, boosting consumer and business confidence.

It noted that more than 57 million Filipinos, or nearly 65% of the target for vaccination, had received at least one COVID-19 vaccine dose as of December 8, 2021.

Meanwhile, the ADB is projecting that the Philippines’ inflation will settle at 4.4% and 3.7% in 2021 and 2022, respectively, mainly due to rising fuel prices.

The inflation projections are higher than the ADB’s September forecast of  4.1% in 2021 and 3.5% for 2022.

The ADB also said it has been assisting the Philippines government in procuring COVID-19 vaccines.

In particular, the bank provided $425 million in total financing through the Health System Enhancement to Address and Limit COVID-19 under the Asia Pacific Vaccine Access Facility (HEAL) and HEAL 2 programs.

The said loans helped fund nearly half of the country’s vaccine supply purchases for 2021, according to the ADB.

On December 13, 2021, the ADB approved $250 million in additional financing under HEAL 2 to help the government procure more COVID-19 vaccines for minors and booster shots for adults. 

The bank added that it has been supporting the government’s “Build, Build, Build” infrastructure development program, which seeks to boost investments on roads, bridges, and railways to fuel faster growth, especially in areas outside the capital Metro Manila.

The ADB’s current investments in the country’s flagship projects include the Malolos-Clark Railway project, EDSA Greenways project, and the Angat Water Transmission Improvement project.

The bank said it is preparing a $175 million loan to assist the government in building climate- and disaster-resilient bridges to improve road traffic flow in Metro Manila. — RSJ, GMA News