Economy sank 9.6% in 2020, says IMF

The International Monetary Fund said Tuesday it expects the Philippine economy to rebound 6.6 percent this year, after sinking by an estimated 9.6 percent in 2020 because of the prolonged global impact of the COVID-19 pandemic.

IMF resident representative to the Philippines Yongzheng Yang said the 2021 growth forecast was lower than the previous assumption of 7.4 percent.  The economy is expected to expand by 6.5 percent in 2022, according to the January 2021 World Economic Outlook Update released by the IMF Tuesday.

“For the January 2021 WEO, real GDP growth for the Philippines is projected at -9.6 percent in 2020, 6.6 percent in 2021 and 6.5 percent in 2022,” Yang said in an e-mailed response to a query.

“The downward revision for 2020 mainly reflects the larger-than-expectation year-on-year contraction in third quarter. The projected rebound in 2021 and 2022 is primarily driven by a renewed infrastructure investment push and a gradual recovery of the private sector, supported by accommodative monetary policy and global recovery,” Yang said.

Yang said the Philippines benefited from a steady flattening of the infection curve since end-September 2020. He noted the authorities’ efforts to prepare for the rollout of the vaccine.

“However, like in most other countries, vaccination is a gradual process and social distancing will persist in 2021. Overall, we expect a robust recovery in 2021-2022 as shown by numbers above, with

progress on vaccination and a steady reopening of the economy,” Yang said.

Data from the Philippine Statistics Authority showed the gross domestic product declined 10 percent in the first three quarters of 2020.

The interagency Development Budget Coordinating Committee announced the revision of its own GDP target in 2020 to a range of -8.5 to -9.5 percent, deeper from the previous estimate of -5.5 percent.

The council is composed of the secretaries of the Department of Finance, Department of Budget and Management, National Economic and Development Authority and a representative from the Bangko Sentral ng Pilipinas.

The DBCC expects GDP to bounce back by 6.5 percent to 7.5 percent in 2021 and 8 percent to 10 percent in 2022.

IMF also said in the January 2021 WEO report that amid exceptional uncertainty, the global economy was projected to grow by 5.5 percent in 2021 and 4.2 percent in 2022. The 2021 forecast was revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.

“The projected growth recovery this year follows a severe collapse in 2020 that has had acute adverse impacts on women, youth, the poor, the informally employed and those who work in contact-intensive sectors,” the IMF said.

The global growth contraction for 2020 is estimated at -3.5 percent, or 0.9 percentage point higher than projected in the previous forecast, reflecting stronger-than-expected momentum in the second half of 2020.

Topics: International Monetary Fund , IMF , Philippine economy , COVID-19 pandemic
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