INVESTING in green growth will allow developing countries like the Philippines to recover from the pandemic and meet the Sustainable Development Goals (SDGs), according to economists from the Asian Development Bank (ADB).
In an Asian Development Blog, a team of ADB economists led by Shu Tian and Donghyun Park of the bank’s Economic Research and Regional Cooperation Department (ERCD) said investing in green growth will require both the public and private sector.
Investments should be made in green energy and transport, clean water, and the broader blue economy, and with social benefits like poverty reduction, jobs, gender empowerment, and equitable access to health and education services.
“A fundamental challenge facing developing economies in Asia is the financing of a green and inclusive recovery. The huge funding needs are often beyond the means of the public sector,” the economists said.
“Therefore, Asian economies must attract more private capital to close the funding gap by mobilizing resources from a much broader funding base. The participation of private capital can also foster risk sharing on green and social investments,” they added.
These investments will go a long way, especially where the SDGs are concerned. The economists said data showed annual investment in SDGs by developing countries is currently around $1.4 trillion, 69 percent short of its target.
This means there is an annual financing gap of as much as $3.1 trillion from the recommendation of the United Nations Conference on Trade and Development (Unctad).
Based on the Unctad, globally, developing countries need to invest as much as $4.5 trillion annually from 2015-2030 to meet the SDGs.
“We also found that the pandemic may add substantially to the financing requirements of meeting the SDGs. The sharp economic downturn due to Covid-19 has a bigger impact on the poor and has likely exacerbated inequality,” the authors said.
“Lockdowns and other social distancing measures have a bigger impact on less-skilled workers than professionals and office workers who can work remotely from home,” they added.
In its Asian Development Outlook (ADO) 2021, ADB downgraded its forecast for Philippine GDP to a “floor” of 4.5 percent this year, significantly lower than the 6.5 percent it projected for 2021 last year. In 2022, the economy is forecasted to grow 5.5 percent.
Prior to the pandemic, the last time the economy posted a growth of below 6 percent was in 2011 when GDP growth averaged 3.9 percent. The ADB projections are also below the government’s growth expectations. Data showed ADB projects inflation to average 4.1 percent this year and 3.5 percent next year. The new 2021 forecast is higher than the bank’s estimate of 2.6 percent made last year.
Merchandise exports are expected to post a growth of 6.6 percent in 2021 and 10.2 percent in 2022. Imports are projected to grow 9.6 percent this year and 12.5 percent next year. The country’s trade deficit is expected to reach $36.35 billion this year before widening to $42.03 billion next year.
ADB said economic growth drivers for this year and next year include the government’s infrastructure spending and social assistance; the implementation of Covid-19 vaccination; and the recovery of the global economy.