The Asian Development Bank (ADB) has maintained its domestic output growth outlook for the Philippines this year and next year, citing positive factors that will aid the economy’s recovery.
In a supplement to its Asian Development Outlook released on Tuesday, the Manila-based multilateral institution said its growth forecast for the Philippines remained unchanged at 4.5 percent in 2021 and 5.5 percent in 2022.
Despite the fact that the Philippine economy contracted by 4.2 percent in the first quarter of this year, the ADB said it was an improvement over the previous four quarters and in line with expectations.
“Sustained government spending on infrastructure and social assistance programs is supporting recovery, as did a gradual pickup in household spending aided by strong remittances,” it added.
The Department of Budget and Management has reported that state infrastructure and capital outlays increased by 41.3 percent to P332.3 billion in the first five months of 2021, compared to P235.2 billion a year earlier.
The ADB highlighted that “private investment remained sluggish,” but that “indicators such as PMI, industrial production, and imports improved gradually.”
According to the latest IHS Markit poll, the purchasing managers index (PMI) climbed to 50.8 in June from 49.9 in May. The PMI takes into account new orders, output, employment, suppliers’ delivery time, and stocks. Readings above 50 signal an expansion; below that, a contraction.
Meanwhile, the country’s manufacturing production expanded by 265 percent and 249.5 percent year-on-year in May, as measured by the Volume of Production Index and the Value of Production Index, respectively.
Imports, on the other hand, grew by 47.7 percent year-on-year to $8.65 billion in May.
“The government’s vaccination effort has accelerated to over 250,000 jabs daily,” the ADB continued, “improving the prospects that community protection in metropolitan Manila could be achieved by year end.”
The ADB’s unchanged growth projection for the Philippines was slower than the government’s retained GDP expansion targets of 6-7 percent for 2021 and 7-9 percent in 2022.
BY MEYNARD DELA CERNA