MANILA, Sept. 29 (Xinhua) -- The Philippine economy is forecast to contract by 6.9 percent in 2020 amid the COVID-19 pandemic before rebounding to 5.3 percent in 2021 and 5.6 percent in 2022, according to a new report released by the World Bank on Tuesday.
The report titled From Containment to Recovery, the World Bank's October 2020 Economic Update for East Asia and the Pacific, says that the contraction is "a drawn out process that could slow down the country's rapid progress in poverty reduction in recent years."
The Philippine economic growth averaged 6.6 percent from 2015 to 2019, resulting from prudent macro-fiscal management, significant investments in infrastructure and human capital, and favorable external conditions.
The report says that the COVID-19 shock is now abruptly pushing the country's economy into recession and threatening these economic and social gains. The pandemic has triggered declines in remittances sent by Filipino overseas workers and job losses caused by strict containment measures, adds the report.
Social assistance to poor and vulnerable families as well as micro and small enterprises will help cushion the impact of COVID-19 and hasten recovery in the Philippines, the report says.
The report says that recovering from the pandemic requires effective public health management and social protection measures in the immediate and resuming the government's strong emphasis on human capital investments and infrastructure that characterized the Philippines' successful growth story pre-COVID-19.
"In the short-term, every peso put directly in the hands of poor and vulnerable families through social assistance translates into demand for basic goods and services in local communities, which in turn supports micro and small enterprises and the government's recovery efforts," said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.
"At the same time, one cannot overemphasize the importance of improvements in public health management including testing, tracing, isolating, and treatment to effectively control the spread of COVID-19 and secure a definitive recovery," Diop said.
In the first half of 2020, the Philippine economy shrank by 9.0 percent. The contraction, the largest since 1985, was driven by the implementation of strict quarantine measures including restrictions on mobility, work-from-home arrangements, and closures of workplaces that choked economic activities.
Philippine exports and imports also weakened as international trade slumped, upended by massive disruptions in global value chains.