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In H1, ADB expects the PH economy to remain 'fragile'

by Philippine Resources - April 23, 2021

According to a Manila-based Asian Development Bank (ADB) official, the Philippine economy will remain "fragile" in the first half of 2021, despite the fact that mass vaccination against COVID-19 and the implementation of major infrastructure projects will help the country recover in the short term.

Kelly Bird, ADB country director for the Philippines, discussed the pandemic's global and local instability in an online roundtable conversation, noting that the Philippines have yet to flatten the virus infections curve. The protracted quarantine, according to Bird, would hinder the economy's reopening and recovery from the pandemic-induced contraction.

Next week, the Asian Development Bank will issue revised economic estimates for the Asia-Pacific region. It predicted that the Philippines' gross domestic product (GDP) will rise by 6.5 per cent in 2021, inside the government's goal range of 6.5-7.5 per cent. Last year, the Philippines experienced its worst postwar recession, with the economy contracting by a staggering 9.6%, owing in part to the region's longest and most strict COVID-19 lockout. However, Bird believes that public spending, particularly on infrastructure, will be the driving force behind future economic growth.

“This is where, in a way, the Philippines is much better placed than a lot of other countries because the government [put in place] the ‘Build, Build, Build’ infrastructure program. In times like this, infrastructure investments are critically important for recovery,” Bird cited the new employment created by these programs as well as their links to the overall economy. The government planned to spend P1.17 trillion on public works this year, or 5.9% of GDP, and another P1.15 trillion, or 5.1 per cent of GDP, next year.

“A lot of large, complex projects will come onstream this year … That will help support recovery this year and next year,” Bird said.

Railways, transportation infrastructure, sustainable tourism, flood protection, drainage, and irrigation were among the $3.57 billion worth of Philippine services and initiatives to be funded by the ADB this year.

Bird is optimistic about the Philippines' “up and running” vaccine scheme.

Out of the Department of Health's $714.57-million second health system enhancement to fix and restrict COVID-19 (Heal 2) initiative to purchase vaccines, the ADB and the Beijing-based Asian Infrastructure Investment Bank cofinanced $700 million.

Finance Undersecretary Mark Dennis Joven said at the same forum that the Philippines' $1.2 billion (roughly P58 billion) in multilateral loans and the P82.5 billion set aside for the national vaccination program is already enough to buy 140 million doses of the vaccine to protect 70 million Filipinos, or the country's entire adult population.


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