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MANILA – Increase in government’s infrastructure spending this year is expected to fuel Philippine economy’s recovery this year even as the International Monetary Fund (IMF) slashed its growth forecast for 2020 and 2021.
“The projected rebound in 2021 and 2022 is primarily driven by a renewed infrastructure investment push and a gradual recovery of the private sector, supported by accommodative monetary policy and global recover,” IMF Country Representative to the Philippines Yongzheng Yang said in a reply to e-mailed questions from the Philippine News Agency (PNA).
He said the lender further slashed its 2020 growth forecast for the country to -9.6 percent from -8.3 percent in October 2020, while the new 2021 projection is a recovery to 6.6 percent from 7.4 percent previously.
Yang attributed the cut in the 2020 growth projection to “the larger-than-expectation year-on-year contraction in Q3 (third quarter).”
The domestic economy contracted by 10 percent in the first three quarters of 2020, with the first to third quarter figures at -0.7 percent, -16.9 percent, and -11.5 percent, respectively.
The government is set to announce the fourth quarter and full year 2020 gross domestic product (GDP) figure on Thursday.
Yang said the domestic output, as measured by GDP, is projected to be at 6.5 percent, in 2022.
Asked on his projection on when the domestic economy can go back to its pre-pandemic performance, Yang said “as the numbers above show, the rate of economic growth is expected to return to pre-pandemic trends over time.”
“But there will be some permanent loss of output levels because of scarring,” he added.
Economic managers’ 2020 GDP target was between -8.5 percent to -9.5 percent but recovery is seen to be around 6.5 percent to 7.5 percent this year and further improvement to around 8-9 percent for 2022.
The government’s spending program for this year amounts to around PHP4.23 trillion, about 23.3 percent of domestic output. (PNA)
