An encouraging outlook for PH recovery
Earlier this week, the Asian Development Bank (ADB) presented an update to its Asian Development Outlook, or ADO 2021, and while the news for Southeast Asia as a whole has been unsettling in some ways, we can take to heart that the Philippines is, according to estimates, ADB Global View experts well positioned to recover from the economic crisis of the coronavirus pandemic.
Twice a year, in April and September, the ADB publishes the “Asian Development Outlook”. In the September update, the ADB maintained its April forecast of 4.5 percent growth in gross domestic product (GDP) for this year and 5.5 percent for 2022, citing “signs of a gradual recovery in the country’s economy with an upturn in domestic demand and favorable “firm external trends in line with the ADO forecasts announced in April.”
The report also mentioned continued growth in public infrastructure spending, improved consumer confidence, a stronger-than-expected recovery in imports, including imports of capital goods and raw materials, and expected increases in goods exports, revenue from business process outsourcing and higher remittances from Filipinos overseas as a driver of the economic recovery. The ADB also recognized the government’s policy reforms, notably the National Employment Recovery Strategy adopted in June, which focuses on quality job recovery, upskilling, expanding social protection and active labor market programs.
In general, if all goes as expected, the economy should recover to pre-pandemic levels by the end of next year. There are, of course, a few major caveats, the main risk being the spread of newer, more contagious variants of the coronavirus, which could require the return of more stringent containment measures and, consequently, bring economic activity back to a standstill.
The biggest factor in the Philippines’ success or failure, as in any other country, is how quickly and efficiently the vaccination campaign can be carried out. Despite all the criticism of the government’s vaccination campaign – much of it well deserved – the ADO at least shows that our situation here could be even worse; other countries in the region that might be expected to do better, such as Thailand and Vietnam, are actually struggling to get vaccinations. The Philippines are lagging somewhat because the government was late in getting the vaccination campaign going but is otherwise maintaining a good pace, as the data presented in the report show.
A major concern for the ADB, both regionally and globally, is the sharp increase in poverty caused by the coronavirus. Data from other sources have shown that most of the progress in poverty alleviation under the Duterte administration was completely undone from 2016 to 2019, and that poverty levels in the country may be worse today than it was five years ago.
To this end, the ADO devotes an entire chapter to questions and ideas relating to agricultural development, as this sector is a problematic fulcrum of several broadly interrelated national concerns – poverty and employment, food security and public health, environmental management and macroeconomic performance. The report certainly does not suggest that the Philippines is not paying enough attention to agriculture or has unproductive policies, but the implication is that agriculture will be given an even higher priority than it already has in order to meet the economic growth projections .
Another piece of good news that came from the online briefing about it on Wednesday, not from the ADO, was that fears of wider economic chaos as a result of the possible collapse of China’s largest real estate developer Evergrande are unlikely to be guaranteed. This is an issue of growing concern here in the Philippines due to its extensive investment relationship with China, but the ADB believes that China has sufficient resources and capital controls to prevent widespread disaster if Evergrande fails.
While the Philippines remains exposed to many risks, it is encouraging that the country is generally “on track” to recover, in the ADB’s knowledgeable and influential assessment. The current government and the next – whoever it may be – that will be installed in the middle of next year should ensure that the positive momentum does not subside.