MANILA, Dec. 7 (Xinhua) -- The World Bank raised the Philippines' gross domestic product (GDP) growth forecast for 2021 to 5.3 percent this year from a 4.7 percent forecast in June, according to an updated World Bank report released on Tuesday.
"The Philippine economy is forecast to grow 5.3 percent this year before accelerating to an average of 5.8 percent in 2022-23 on the road to recovery," says Philippines Economic Update (PEU) titled "Regaining Lost Ground, Revitalizing the Filipino Workforce," adding the Philippines will rebound this year from a deep contraction in 2020.
The report adds that the government spending on infrastructure is expected to buoy growth, aided by the steady progress in vaccination leading to greater people mobility and the revival of businesses.
The report projects household consumption to recover, anchored on rising remittances and improving incomes as more people regain or find new jobs barring a new uptick in COVID-19 cases.
"The new (Omicron) 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 for Brunei, Malaysia, Philippines and Thailand in an online briefing.
As the recovery gains traction, Diop said, "It is important to enhance private sector participation in the recovery by deepening current efforts to make the country's business environment favorable to job creation while upskilling the workers so that they can benefit from new or emerging job opportunities."
In 2022, the report says the phased economic reopening is expected to benefit the services sector, especially transportation, domestic tourism, and wholesale and retail trade. Sustained public investment will continue to support construction activities.
The report flags that the COVID-19 pandemic remains a major risk to the country's growth prospects despite encouraging trends.
The report notes that infections have continued to spread even in countries with high vaccination rates, albeit with greatly reduced severity of illness, hospitalization, and mortality. Variants of concern, breakthrough cases, and waning vaccine efficacy have highlighted the complexity of economic reopening.
"Speeding up vaccination especially in areas outside (Metro Manila) 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," Senior World Bank Economist Kevin Chua said.
Social protection measures, including the country's cash transfer programs, remain essential measures to mitigate the adverse impact of the pandemic on livelihoods, health, and education, especially among poor families, he added.