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Thursday, March 28, 2024

WB cuts PH growth forecast to 3%

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The World Bank downgraded the 2020 growth forecast for the Philippines to 3 percent from the actual expansion of 5.9 percent in 2019 because of the impact of the coronavirus disease 2019 pandemic.

“Real GDP growth is projected to significantly decelerate from 5.9 percent in 2019 to 3.0 percent in 2020 due to the impact of the COVID-19 outbreak and the associated community quarantine. The quarantine restricts all nonessential movement of people and closed down businesses and government agencies in Luzon—which accounts for 70 percent of national GDP—until April 14,” the World Bank said in its latest regional economic update titled “East Asia and Pacific in the Time of COVID-19.”

The multilateral lender said domestic consumption would slow down sharply in the first half of 2020 while the implementation of a public infrastructure program was expected to be delayed and private sector investment to be postponed.

“Export of goods and services are also expected to be negatively impacted with the imposition of travel restrictions globally and the production disruption experienced in China in which the Philippine electronic sector has a strong linkage. Furthermore, travel bans and the COVID-19 outbreaks in overseas Filipino workers-destination countries are likely to affect the inflow of remittances in 2020, further damping domestic consumption growth,” it said.

The World Bank said the economy could contract in 2020 in case of a rapid surge in confirmed cases resulting in a prolonged community quarantine, lengthier disruptions to government and business activities, loss of incomes and a protracted weakening of the public health system.

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The World Bank said economic growth was expected to accelerate rapidly in 2021 to 22 as global conditions improve and with more robust domestic activity bolstered by the public investment momentum and a boost from 2022 election-related spending.The bank said the Philippines is among countries in the East Asia and Pacific region that should act now to counter the possibility of a global financial shock and recession associated with the spread of the disease.

Among the actions recommended by the report were urgent investments in national healthcare capacity and longer-term preparedness. The report also suggested taking an integrated view of containment and macroeconomic policies. It said targeted fiscal measures such as subsidies for sick pay and healthcare would help with containment and ensure that temporary deprivation does not translate into long-term losses of human capital.

“Apart from expanding conventional health care facilities and medical equipment factories, innovative measures are likely to be needed such as converting ordinary hospital beds for ICU use and rapidly training people to work in basic healthcare. Ensuring adequate access for the poor may require the provision of free or subsidized testing and treatment,” the bank said.

It said growth in the developing East Asia and the Pacific region was projected to slow to 2.1 percent in the baseline and to negative 0.5 percent in the lower case scenario in 2020, from an estimated 5.8 percent in 2019.

Growth in China is projected to decline to 2.3 percent in the baseline and 0.1 percent in the lower case scenario in 2020, from 6.1 percent in 2019.

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