The Philippine economy’s growth turns positive and bounces back to 5.7% in 2021 after experiencing a drop in growth in 2020 due to the COVID-19 pandemic.
The Philippines surpassed growth targets and recorded positive annual growth, reflecting improved economic conditions and a positive outlook for the economy. The economy experienced an expansion of 5.7% in 2021, a stark difference from the 9.5% downturn in 2020 that was recorded as the worst annual contraction since 1946. Despite COVID-19 cases rapidly increasing and economic activities coming to a halt, the country surpassed its revised growth target range of 5% to 5.5%. Although international organizations and private economists took a dim view of the 2021 growth outlook for the Philippines due to pandemic-related qualms, the proper management of fiscal and monetary policies and the uptrend in vaccination rates have boosted the industry and services sectors on the supply-side and accelerated all components in the demand-side relative to 2020. Furthermore, unemployment has steadily declined and consumer sentiment has gradually improved as each quarter progressed, reflecting market conditions that are slowly normalizing. However, the risks from a new coronavirus variant and brewing geopolitical tensions in the last quarter of 2021 may hamper the growth momentum of the economy moving forward. Nevertheless, with continued proper pandemic control, the preparation of risk management policies, and a clear plan forward for the next administration after the May 2022 elections, economic activities and market sentiment should continue to normalize.