ADB keeps economic growth forecasts for Philippines in 2022, 2023

Manila-based multilateral lender Asian Development Bank (ADB) has kept its growth projection for the Philippines this year and next as it considers the country’s strong domestic demand coupled with easing of pandemic-related restrictions despite higher inflation.

Citing its latest Asian Development Outlook 2022 Update, the ADB said the Philippines gross domestic product (GDP) will grow 6.5% in 2022.

The multilateral lender’s latest forecast is the same as the outlook reported in the Asian Development Outlook 2022 Supplement released in July. 

“A strong rebound in domestic demand with the easing of COVID-19 mobility restrictions in the country will support robust growth for the Philippine economy in 2022, despite higher inflation due to global and local price pressures,“ the bank said.

As of the second quarter of the year, the country’s GDP — the total value of goods and services produced in a specific period — grew by 7.4% during the April to June period, slower than the downwardly adjusted 8.2% GDP growth in the first quarter of the year.

Year-to-date, the Philippine economy grew at 7.8%, still within the economic managers’ target of 6.5% to 7.5% growth for the entire year.

2023

For 2023, the ADB also kept its projection of 6.3% GDP growth “as monetary policy tightening and accelerating inflation both crimp domestic demand.”

The bank, however, said inflation is expected to quicken to 5.3% in 2022, up from the July forecast of 4.9%, “underpinned by sharp upward shocks to global energy and commodity prices.”

The negative impact of natural disasters on domestic agricultural supply will likely lead to higher food prices until the end of the year, the ADB said.

Meanwhile, the inflation forecast for 2023 is kept at 4.3% “since the return to steady economic growth will keep inflation relatively stable, and with energy prices likely to decelerate.”

“The normalization of socioeconomic activity will usher the Philippine economy to a steady, pre-pandemic pace of expansion,” said ADB Philippines country director Kelly Bird.

“The recovery in tourism and private investments, coupled with sustained public spending on large infrastructure projects and remittances from overseas Filipinos, will bolster the country’s economic recovery this year,” said Bird.

The ADB, however, said that downside risks to the growth outlook could come from a sharper slowdown in major advanced economies, heightened geopolitical tensions, and possibly sustained elevated global commodity prices due to the Russian invasion of Ukraine.  —KBK, GMA News