The Philippine economy is recovering from its deepest ever recession in 2020, but growth forecasts could be lowered due to the resurgence of COVID-19 infections in early 2021. Further economic recovery would depend on a quicker rollout of vaccinations, the implementation of targeted containment measures, and continued government spending.
The economy faces two main short-term risks: a prolonged wave of coronavirus infections and potential financial distress in the business sector.
Structural policies and reforms are needed to enhance the resilience of the economy and facilitate the transition to the post-pandemic new normal. The government’s efforts to promote digitalization, invest in infrastructure, and improve the “doing business” environment are welcome.
AMRO’s annual report on the Philippines also assesses the impact of the pandemic on overseas remittances to the country, the adequacy of fiscal policy space for the country to continue injecting fiscal stimulus, the rapid development of the fintech sector — especially against the backdrop of movement restrictions due to the pandemic — and monetary transmission in the Philippines during uncertain economic times.