The Philippine economic growth is projected to fall to 2.0 per cent in 2020 before a strong recovery to 6.5 per cent in 2021, assuming COVID-19 outbreak is contained by June this year, said ADB.
According to a new report by the Asian Development Bank (ADB) released on Friday, the country's economic growth will slow significantly this year before a strong rebound in 2021, with expansionary fiscal and monetary policies partly offsetting slower domestic demand and disruptions in tourism, trade, and manufacturing.
"Risks are tilted to the downside. The main downside risk to gross domestic product (GDP) growth in 2020 comes from COVID-19 and is therefore highly unpredictable. The impact on the economy will be larger than currently assumed if the global outbreak is prolonged beyond the first half, or if there is a sustained local transmission in the Philippines," the report said.
ADO is the annual flagship economic publication of the Manila-based bank, reports Xinhua.
ADB projects the Philippines' gross domestic product to grow at 2.0 per cent in 2020 following an "enhanced community quarantine" imposed by the government in March to stop the spread of the novel coronavirus disease in the country.
But ADB expects a strong recovery to 6.5 per cent GDP growth in 2021, assuming that COVID-19 infections in the country are curbed by June this year.
"This unprecedented and extraordinary public health emergency brought about by the COVID-19 pandemic will substantially slow down economic growth this year, with most of the contraction in the economy occurring in the second quarter," said ADB Country Director for the Philippines Kelly Bird.
Bird said ADB is anticipating a bounce back starting in the second half of this year, supported by the government's stimulus spending and easier monetary policies.
The Philippines now has 2,633 confirmed cases, including 107 deaths and 51 recoveries.
On March 14, ADB approved a 3-million-US-dollar grant to help the government deliver much-needed emergency medical supplies and equipment, including a new laboratory to enhance the country's capacity to conduct more COVID-19 tests. This week, ADB launched a 5-million-US-dollar project to provide critical food supplies for poor families in Metro Manila.
The quarantine measures have shut down schools and most government offices and private establishments in Metro Manila and the entire Luzon island, which accounts for over half of the country's total population and generates more than two-thirds of the country's overall GDP.
Sustained public investment - especially in priority projects under the government's "Build, Build, Build" (BBB) infrastructure development program - and a rebound in private consumption will drive economic growth in 2021, the report said.
The report said the economy will also benefit from the government's large-scale fiscal spending to boost the delivery of relief measures to vulnerable sectors affected by the pandemic.
Inflation is expected to reach 2.2 per cent this year and 2.4 per cent in 2021, with further downside pressure from lower global oil prices.
With inflation projected to remain within the central bank's target range of 2.0 per cent to 4.0 per cent, the report said authorities have room for further monetary policy expansion to cushion any lingering effects of the pandemic on the economy.