UN ESCAP downgrades Philippine growth forecast as virus infections surge

THE PHILIPPINE economy is expected to expand by 6.5% this year, downgraded from the previous estimate of 7% due to its failure to contain the coronavirus outbreak, a United Nations (UN) agency said.

The UN Economic and Social Commission for Asia and the Pacific (ESCAP), updated the forecast it had issued in August in its Economic and Social Survey of Asia and the Pacific 2021 report, released Tuesday.

In 2022, ESCAP is projecting growth of 6%.

The official government forecasts are 6.5-7.5% this year and 8-10% in 2022, both of which were projected before the latest spike in the coronavirus disease 2019 (COVID-19) case count.

“Only a few countries, such as Vietnam, managed to fully capture this tailwind. Indonesia, Malaysia and the Philippines remain mired in prolonged pandemic threats and economic disruptions,” it said in the report.

ESCAP said the economy’s heavy reliance on remittances may further hamper the recovery because overseas worker job stability and wages are also threatened by the prolonged global health crisis.

The 2021 projection for the Philippines was second in Southeast Asia, after Vietnam’s 7%. The regional average was 4.7%.

ESCAP warned that the impact of the pandemic will worsen poverty in the Asia-Pacific region, where an estimated 89 million more people will be pushed back into extreme poverty, defined as those living with less than $1.90 per day.

“The haphazard and less-than-adequate response by governments to such a shock highlights the urgency to rethink economic policymaking, which has so far been focused primarily on economic growth, neglecting critical investments in people and in building resilience,” ESCAP said.

Further downside to the region’s growth prospects comes from the resurgence in coronavirus cases and new lockdowns. Meanwhile, mass vaccination programs could be slowed due to challenges encountered during rollout, with most developing economies in Asia-Pacific only achieving herd immunity by next year.

“A ‘K-shaped recovery’ is likely, with poorer countries and more vulnerable groups being marginalized in the post-pandemic recovery and transition period,” it said.

The Philippine capital and nearby provinces were placed under strictest lockdown settings for the week to April 4 after the daily case count exceeded 10,000 for the first time during the pandemic.

ESCAP estimated Philippine inflation to average 2.9% this year, up from 2.6% in 2020. In 2022, inflation is expected to average 3.1%.

The inflation forecasts are both within the central bank’s target range of 2-4%, but lower than the recent estimate of 4.2% inflation for 2021 issued by the Bangko Sentral ng Pilipinas.

“COVID-19 is a shock like no other and it requires a response like no other. The time is now for the Asia-Pacific region to seize this opportunity to speed up and make its transition towards more resilient, equitable, and green development the centerpiece of the post-pandemic economic recovery,” according to Armida Salsiah Alisjahbana, UN undersecretary-general and executive secretary of ESCAP. — Beatrice M. Laforga