MANILA: The World Bank on Tuesday raised its forecast for Philippine economic growth in 2021, to 5.3 per cent, despite lingering global uncertainty about new variants of Covid-19.
The updated growth projection marks a significant increase on the 4.7 per cent growth predicted by the World Bank in its June assessment.
In 2022, gross domestic product was expected to rise to 5.8 per cent, down from the initial forecast of 5.9 per cent in June, the World Bank said.
Government spending on infrastructure was expected to keep the economy afloat, boosted by growing vaccine uptake, which analysts believe will lead to greater personal mobility and will lead to a recovery for business.
Household consumption was also expected to recover, barring a new surge in Covid-19 cases, the bank added.
"The new variant has added a layer of uncertainty, but economic reopening, along with progress in vaccination, is clearly strengthening domestic dynamism and market confidence," said Ndiame Diop, World Bank country director.
"As the recovery gains traction, it will be important to enhance private sector participation in the recovery by deepening current efforts to make the country's business environment favourable to job creation," he added.
Diop called for reforms that would boost private sector growth, create jobs and strengthen recovery, such as opening more sectors to foreign investment, facilitating market entry and encouraging firms to adopt new technology.
The Philippines has faced two waves of Covid-19 since 2020. In both instances, the government imposed severe restrictions on the population, which, combined, led to a 15-month recession. The economy rebounded in the second quarter of this year, however.
The daily tally of new Covid-19 cases has dropped to below 1,000 during the past two weeks, prompting the government to further ease coronavirus restrictions.
On Tuesday, the Philippines logged only 356 additional Covid-19 cases, the lowest daily rate since July 2020. The country to date has recorded a total of 2.83 million cases, while the death toll now stands at 49,591, the Department of Health said.
Despite encouraging trends, the Covid-19 pandemic remains a major risk to the Philippines' growth prospects, the bank said.
"Speeding up vaccination, especially in areas outside the capital region, and sustaining the observance of health protocols including masking and maintaining social distancing are measures that remain important as the country navigates the challenges of reviving the economy," said Kevin Chua, senior World Bank economist.
The World Bank noted that even in countries with high vaccination rates, infections have continued to spread.
In the Philippines, more than 35 per cent of the country's total population of 110 million have so far been fully vaccinated against Covid-19. — dpa
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