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The Asian Development Bank (ADB) has kept its growth forecast for the Philippine domestic output for this year and next year, citing favorable trends that will help the economy recover, according to a report by Manila Times.
The Manila-based multilateral institution said its growth outlook for the Philippine gross domestic product (GDP) are unchanged at 4.5 percent in 2021 and 5.5 percent in 2022 in a supplement to its Asian Development Outlook released on Tuesday.
While the Philippine economy declined by 4.2 percent in the first quarter of this year, it was an improvement over the previous four quarters and in line with growth predictions in April, according to the ADB.
"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 said.
State infrastructure and capital outlays surged by 41.3 percent to P332.3 billion in the first five months of 2021, compared to P235.2 billion a year earlier, the Department of Budget and Management (DBM) reported earlier.
"Private investment remained sluggish," the ADB noted, "but indicators such as PMI, industrial production and imports improved gradually."
The purchasing managers index (PMI) rose to 50.8 in June from 49.9 in May, according to the latest IHS Markit poll.
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 in May, measured by the Volume of Production Index and Value of Production Index both accelerated year-on-year by 265 percent and 249.5 percent, respectively.
Imports, on the other hand, soared at an annual rate of 47.7 percent year-on-year to $8.65 billion in May.
The ADB said: "The government's vaccination effort has accelerated to over 250,000 jabs daily, improving the prospects that community protection in Metropolitan Manila could be achieved by year-end."
DBCC growth targets maintained
The ADB's unchanged growth projection for the Philippines was slower than the government's retained GDP expansion targets of 6 to 7 percent for 2021 and 7 to 9 percent in 2022.
The 6- to 7-percent growth assumptions for 2023 and 2024 were also maintained.
The maintaining of government's targets macroeconomic assumptions was announced on Monday night by the Budget department following the Development Budget Coordination Committee's (DBCC) meeting.
"To support this outlook, the DBCC emphasized its support to manage risks and continue the gradual and safe reopening of the economy, subject to the strictest compliance to minimum public health standards," it said in a statement.
The DBM went on to say that a more aggressive implementation of the prevention, detection, isolation, treatment and recovery strategy, as well as full vaccination of residents in high-risk areas, will help to boost consumer and business confidence, strengthen the country's health system and prevent community transmissions of the Delta variant.
It also stated that the relaxation of quarantine restrictions in high-risk areas should be accompanied by a faster vaccination rollout to allow more enterprises to operate and consumers participate in socioeconomic activities.
"With these actions, the DBCC is optimistic that the country's GDP may return to its pre-pandemic levels as early as 2022," the agency emphasized. "The DBCC remains committed to restoring jobs and building a stronger and more competitive economy while sustaining the Duterte administration's legacy of real change for future generations."