The International Monetary Fund (IMF) slashed its 2021 growth forecast for the Philippines to 5.4% from 6.9%, but a sharp rebound could come next year if coronavirus quarantine curbs are eased sooner than expected, its mission head said on Wednesday.
A new surge in COVID-19 cases starting in March prompted the reimposition of stricter containment measures or MECQ, likely slowing the country's economic recovery in the first half, Thomas Helbling, IMF mission chief for Manila, told reporters in a briefing.
The Philippines is battling one of Asia's worst coronavirus outbreaks with more than 1.3 million cases recorded and nearly 23,000 deaths.
The economy contracted by a record 9.6% last year, and gross domestic product shrank 4.2% in the first quarter, a bigger drop than had been expected. Manila has a 6.0-7.0% growth target for this year.
New cases have come off a peak, allowing the government to gradually ease restrictions in the region around the capital. But provinces continue to battle surges, showing the pandemic is far from over in the Southeast Asian nation.
For 2022, the Philippines' economy is forecast to grow 7.0%, stronger than the IMF's previous forecast of 6.5%, Helbling said.
But a resurgence of COVID-19 infections and potential delays in vaccinations due to supply constraints pose downside risks to the IMF's outlook, Helbling said.
As of June 13, the country has administered two doses of COVID-19 vaccines to close to 2 million people, government data showed, or just 2.8% of the 70 million it aims to immunise this year.
For the recovery to take hold, Helbling said the country's monetary policy should remain accommodative and the government must maintain financial stability and revive credit growth.