ADB forecasts 3.8% PH economy contraction in 2020

The Asian Development Bank (ADB) now forecasts a 3.8% contraction for the Philippine economy in 2020, a more severe downturn than the government's projection.

This downward revision is attributed to slower-than-expected household consumption and investment, compounded by a global economic slowdown.

The Philippine economy had already contracted by 0.2% in the first quarter due to border restrictions and domestic demand depression from Enhanced Community Quarantine measures.

Despite the bleak 2020 outlook, the ADB maintains a 6.5% GDP growth forecast for 2021, expecting a recovery driven by public infrastructure spending and renewed consumer and business confidence.

However, the ADB's 2021 forecast remains below the economic managers' target of 8.0% to 9.0%.

The World Bank also downgraded its 2020 GDP forecast for the Philippines to a 1.9% contraction, citing the heavy toll of stringent lockdowns and the Taal Volcano eruption.

A World Bank economist noted that the Philippines' strict community quarantine measures, which lasted nearly two months, significantly impacted its economy more than neighboring countries that focused on contact tracing and testing.