The International Monetary Fund (IMF) is projecting the local economy to grow by 6.9 percent this year and 6.5 percent in 2022, based on the latest World Economic Outlook (WEO) report.
The GDP forecast is higher than the 6.6 percent it noted in January in an WEO update, but has retained its previous 6.5 percent projection for 2022.
The IMF’s forecast for the Philippines is the highest in the ASEAN region, followed by Malaysia and Vietnam which are both projected to grow by 6.5 percent this year, while Indonesia is expected to grow by 4.3 percent and Thailand by 2.6 percent.
For next year, Vietnam is expected to have a higher GDP expansion of 7.2 percent than the Philippines. The country’s 6.5 percent projected GDP growth is the second highest followed by Malaysia with six percent, Indonesia with 5.8 percent and Thailand with 5.6 percent.
Overall, the IMF forecasts ASEAN-5 GDP to recover from its 3.4 percent contraction in 2020 to 4.9 percent growth this year, and 6.1 percent growth in 2022.
The whole of Asia including advanced economies Japan, Korea, Australia, Singapore, Hong Kong and Macao SAR, Taiwan and New Zealand, are expected to bounce back to 7.6 percent growth this year and 5.4 percent in 2022.
As for emerging and developing Asia regional group, with China and India, IMF projects an 8.6 percent growth this year and a six percent in 2022.
The IMF said projections were improved because of stronger recovery than initially expected after lockdowns were eased in some large countries such as India. “However, still high COVID-19 caseloads in some large countries (such as Indonesia and Malaysia) put a lid on growth prospects,” it added.
The IMF is projecting a stronger recovery in 2021 and 2022 for the global economy at six percent in 2021 and 4.4 percent in 2022, however it said the outlook “presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis.” It said this divergent recovery paths could create “significantly wider gaps in living standards between developing countries and others, compared to pre-pandemic expectations.”
“A high degree of uncertainty surrounds these projections, with many possible downside and upside risks. Much still depends on the race between the virus and vaccines. Greater progress with vaccinations can uplift the forecast, while new virus variants that evade vaccines can lead to a sharp downgrade.
Large divergences in recovery speeds also raise the prospect of divergent policy stances,” according to the IMF.
The IMF is calling for a strong international cooperation to address these recovery gaps between advanced, emerging and low-income developing economies.
The WEO puts emphasis on nations closely working together to narrow the gap of living standards post-pandemic among emerging market economies, low-income developing countries and high-income countries. “This means ensuring adequate worldwide vaccine production and universal distribution at affordable prices—including through sufficient fund-ing for the COVAX facility—so that all countries can quickly and decisively beat back the pandemic,” said the IMF.
The IMF also stressed on the international community’s cooperation to make sure that financially constrained economies “have adequate access to international liquidity so that they can continue needed health care, other social, and infrastructure spending required for development and convergence to higher levels of income per capita.”