World Bank maintains 5.7% growth outlook for Philippines in 2022

Washington-based multilateral lender World Bank has retained its economic growth outlook for the Philippines this year, still taking into consideration the impact of the Russia-Ukraine war on the global economy.

At a virtual press briefing on Wednesday for the lender’s Philippine Economic Update June 222 edition, World Bank senior economist Kevin Chua said the bank maintained its 2022 gross domestic product (GDP) growth projection for the country at 5.7%, similar to its forecast in the East Asia and Pacific Economic Update report released in April. 

The World Bank’s latest growth projection is below the government’s trimmed GDP target of 7% to 8%. 

In its report, the lender highlighted the  country’s robust 8.3% GDP growth in the first quarter of the year, which its said was “fueled by strong domestic demand and the recovery of industry and services sectors.”

Despite the faster-than-expected economic growth at the opening of the year, Chua flagged that a “very weak external environment” will temper the country’s growth.

The World Bank, in particular, cited several risks to the outlook, such as rising inflation, geopolitical uncertainty brought about by the Russian invasion of Ukraine, tightening global financing conditions, and weaker growth of trading partners like the United States and China.

The lender also said that while the country has entered a benign phase of the pandemic, the threat of a new variant-driven surge also hangs over the growth outlook.

The banks further said that prolonged war in Ukraine and the continuing sanctions on Russia, could further disrupt global economic activity, slow down growth of major economies in the world, and impair trade and financial flows.

Nonetheless, it said that the Philippines’ continuing growth this year will draw strength from an improving domestic environment, characterized by low COVID-19 cases, greater mobility of people, and wider resumption of economic and social activities.

The World Bank said that further reopening of the economy is shoring up services, especially transportation, restaurant and food services, and wholesale and retail trade. Prospects have improved for tourism following the opening of borders to vaccinated individuals, reopening of tourist attractions, and relaxed travel requirements for travelers.

Likewise, sustained public investments, along with recovering business activities, will boost construction and industry sectors.

“Continuity of reforms in the last six years promoting greater competition and attracting foreign investments will further boost the country’s growth outlook in the coming years,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines and Thailand.

“In the context of narrowing fiscal space, the authorities can encourage public-private partnerships to sustain improvements in the country’s infrastructure assuming financial risks to the government are managed and the quality of services for the citizens are secured,” said Diop. — RSJ, GMA News