A slight easing of economic growth may be seen starting the second quarter of the year, however, the country’s gross domestic product (GDP) growth rate may still climb by six to seven percent for 2022, according to a report released yesterday.
First Metro Investment Corp. and the University of Asia and the Pacific’s Market Call report said that the country’s economic recovery should remain on track, despite likely slight easing starting the second quarter of the year.
“More robust economic data–higher employment, national government spending and capital goods imports–as well as firm growth in exports and overseas Filipino workers’ remittances should provide the impetus. Thus, we expect the economy to expand by six to seven percent for the entire year,” the report said.
The report said unlike other countries, the peso depreciation’s positive effects should mitigate a good part of consumer spending weakness dogged by high inflation.
“We see the peso depreciation to boost income of some 70 million Filipinos and offset likely softer consumer spending due to the elevated inflation,” it said.
The Market Call said the peso should also recover in the short-term as the US dollar has started to reverse its recent sharp rise and the Philippine balance of trade deficit slightly softens by the second semester.
“While inflation may still remain close to six percent in the third quarter, we think it should trend downward thereafter as crude oil prices have softened significantly confirming the global economic slowdown,” the report said.
“The US will likely fall into shallow recession while China eked out a slim 0.4 percent GDP growth in Q2 2022, bolstering this view on crude oil prices,” it added.
