The Asian Development Bank (ADB) has maintained its growth forecast for the Philippines this year and next due to the expected strong rebound in domestic demand after easing mobility restrictions due to COVID-19 pandemic.
According to the Asian Development Outlook (ADO) 2022 Update, the Philippines’ gross domestic product is seen to grow by 6.5 percent in 2022, the same as forecast in July but up from the bank’s April forecast of 6 percent, The growth projection for 2023 is also kept at 6.3 percent, as monetary policy tightening and accelerating inflation both crimp domestic demand, the bank said.
“The normalization of socioeconomic activity will usher the Philippine economy to a steady, pre-pandemic pace of expansion. 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 Kelly Bird, ADB Philippines country director.
Inflation is now expected to quicken to 5.3 percent in 2022, up from the July forecast of 4.9 percent and 4.2 percent in the April ADO 2022 report, underpinned by sharp upward shocks to global energy and commodity prices.
ADB said the negative impact of natural disasters on domestic agricultural supply will likely lead to higher food prices until the end of the year.
“The inflation forecast for 2023 is kept at 4.3 percent since the return to steady economic growth will keep inflation relatively stable, and with energy prices likely to decelerate,” ADB said.
According to the report, downside risks to the growth outlook could come from a sharper slowdown in major advanced economies, heightened geopolitical tensions and possible sustained elevated global commodity prices due to the Russian invasion of Ukraine.
ADB also cut its growth forecasts for developing Asia amid mounting risks from increased central bank monetary tightening, the fallout from the war in Ukraine and COVID-19 lockdowns in China.
The ADB now expects the area’s combined economy, which includes China and India, to grow 4.3 percent this year, after previously trimming the forecast to 4.6 percent in July from 5.2 percent in April.
For 2023, the ADB expects the region’s economy to expand 4.9 percent, slower than the April and July forecasts of 5.3 percent and 5.2 percent, respectively.
China’s economy will likely expand 3.3 percent this year, a further step down after previously trimming the forecast to 4.0 percent from 5.0 percent in April. The ADB expects the world’s second-largest economy to grow 4.5 percent next year, slower than a previous estimate of 4.8 percent.
The outlook for the sub-regions this year remained mixed, with Southeast Asia and Central Asia expected to grow faster than previously projected at 5.1 percent and 3.9 percent, respectively.
The ADB, however, kept its growth forecast for South Asia at 6.5 percent, despite a lower growth estimate for India and an economic crisis in Sri Lanka.
ADB has at the same time raised its inflation forecasts in the region, as supply disruptions continue to boost food and fuel prices.
Average inflation in developing Asia this year is now expected to hit 4.5 percent, up from April and July forecasts of 3.7 percent and 4.2 percent, respectively.
For 2023, inflation is seen hitting 4.0 percent, compared with projections of 3.1 percent in April and 3.5 percent in July.
