World Bank slightly downgrades Philippine economic outlook due to Ukraine-Russia war

Washington-based multilateral lender World Bank downgraded its economic growth projection for the Philippines this year after considering the impact of Russia’s invasion of Ukraine on the global economy.

At a virtual press briefing for the lender’s East Asia and Pacific Economic Update report, World Bank East Asia and Pacific chief economist Aaditya Mattoo said the bank’s gross domestic product (GDP) growth projection for the country in 2022 was reduced to 5.7% from 5.8% in its Philippines Economic Update in December 2021.

“It’s a very slight reduction for the Philippines,” Mattoo said, adding that “the projection for the Philippines is already conservative that’s why the downgrade is small.”

The World Bank’s growth projection is lower than the administration’s target of 7% to 9% GDP growth for 2022.

“The reason for the downgrade is primarily the war in Ukraine. It is going to affect the Philippines because it is a net importer of fuel… It is a country exposed to the world,” Mattoo explained.

Domestic fuel pump prices have been consistently increasing since the start of the year, which was aggravated by the ongoing conflict between Russia and Ukraine that has hit global supplies and driven global prices higher.

Nonetheless, Matto said the Philippines’ vulnerabilities in relation to the Ukraine-Russia war are “less compared to other countries.”

“It is not dependent on external financing,” he said.

In its report, meanwhile, the World Bank said that the Philippines is expected to surpass pre-pandemic levels of output in 2022.

Likewise, the National Economic and Development Authority (NEDA) is confident that the Philippine economy will recover to its pre-COVID-19 pandemic level this year despite the ongoing Russia-Ukraine war which causes global uncertainty and oil prices to skyrocket.

In 2021, the economy as measured by gross domestic product (GDP) —the total value of goods and services produced in a specific period— grew 5.6% from a contraction of 9.6% in 2020.

In peso terms, the Philippines’ GDP stood at P19.387 trillion, over P100 billion short of the pre-pandemic or full-year 2019 level of P19.518 trillion. — DVM, GMA News