The Philippine economy grew by an estimated 5.3% in 2021 and is expected to grow by 5.9% this year and 5.7% in 2023, according to the World Bank’s latest Global Economic Prospects report.

The report said the projected 5.9% growth in Philippine gross domestic product this year is supported by sustained public investment and recovering household consumption. Growth is expected to moderate to 5.7% in 2023.

In the East Asia and Pacific (EAP), growth rebounded to an estimated 7.1% in 2021, thanks to an 8% expansion in the economy of China. China’s growth, led by manufacturing and exports, was about 2 percentage points higher than the country’s trend growth rate, but 0.5 percentage point less than projected in June—reflecting faster-than-expected withdrawal of macroeconomic support and regulatory tightening.

Growth in the region excluding China also recovered in 2021, but by a modest 2.5%—1.5 percentage points slower than projected in June and about half the trend growth rate, reflecting the severe COVID-19 resurgence in mid-2021, World Bank said.

A series of significant disruptions caused by the pandemic resulted in weaker-than-expected growth in several large economies in 2021. The damage to activity from the lockdowns and extended border closures was especially evident in tourism-dependent economies where the projected recovery was insufficient to restore output to its pre-pandemic level in 2019.

Activity was also disrupted in some cases by natural disasters, including the devastating landfall of Typhoon Odette (Typhoon Rai) in the Philippines in December 2021.

The recovery of the region has gained momentum on stronger domestic activity, as social distancing measures eased and vaccination rollouts accelerated. Goods export growth softened as global growth and trade peaked amid persistent supply disruptions. Services trade remained subdued, reflecting remaining travel restrictions amid a resurgence of the pandemic. EAP countries, especially the ones reliant on inflows from Australia, New Zealand, and US such as the Philippines, have continued to benefit from resilient flow of remittances.

Growth in EAP is projected to decelerate to 5.1% in 2022, reflecting a slowdown in China. Growth in China is forecast to slow to 5.1% in 2022, near estimates of potential growth, due to the lingering effects of the pandemic and tighter regulations on certain segments of the economy.

In the region excluding China, growth is expected to accelerate to 5% as domestic demand and vaccination rates increase. The region is expected to face a steady decline in global demand, as growth in major economies moderate. International travel is projected to remain below pre-pandemic levels over the forecast horizon amid the lingering pandemic.

Among Association of Southeast Asian Nations (ASEAN) countries, Indonesia’s growth is expected to rebound to 5.2% in 2022, supported by stronger domestic demand and elevated commodity prices, and is expected to reach 5.1% in 2023.

Thailand’s economy is expected to recover gradually over the next two years, with growth picking up in 2022 and strengthening to 4.3% in 2023.

Growth in Malaysia will rebound to 5.8% in 2022 as domestic demand improves amid high vaccination rates, but then ease to 4.5% in 2023 due to fading support from exports and tightening fiscal and monetary policies.

A revival of activity because of better vaccination in Vietnam is expected to lead to a growth of 5.5% in 2022 and 6.5% in 2023.

The World Bank said tourism-dependent economies such as Cambodia, Malaysia, and the Philippines are not expected to recover to pre-pandemic levels until 2022 or, in the case of Thailand, in 2023.

Downside risks to the regional outlook predominate. The share of vaccinated people in many economies in the region is expected to surpass 70 percent by mid-2022, but the region is vulnerable to renewed outbreaks of COVID-19.

Mobility restrictions, incomplete vaccinations, and inadequate testing especially in the face of the highly transmissible Omicron variant, may disrupt the recovery of the tourism and travel industry and weigh on consumer confidence. Financial risks have risen with the growth of indebtedness.

Last December, the Asian Development Bank forecast that the Philippine economy will grow by 5.1% in 2021 and 6.0% in 2022, the growth to be supported by an acceleration in the government’s coronavirus disease (COVID-19) vaccination program.

Meanwhile, the World Bank in its report said the global economy, which displayed a strong rebound in 2021, is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies.

Global growth is expected to decelerate markedly from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.

The slowdown will coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies.

“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries,” said World Bank group president David Malpass. “Putting more countries on a favorable growth path requires concerted international action and a comprehensive set of national policy responses.”