The World Bank has revised upwards its growth forecast for the Philippines this year, citing a strong rebound in private sector consumption.
According to the World Bank East Asia and Pacific Economic Update released yesterday, the Washington-based agency sees the Philippine economy expanding by 6.5 percent this year, faster than its April forecast of 5.7 percent for 2022.
The World Bank’s latest outlook is at the lower end of the Development Budget Coordination Committee’s full year growth assumption of 6.5 to 7.5 percent.
“We did revise the growth forecast for the Philippines…the main reason… is the strong bounce back of private consumption in the Philippines, as in most countries in the region,” Aaditya Mattoo, World Bank East Asia and Pacific chief economist, said in a virtual briefing with reporters.
“But it is also evident to us that the Philippines is one of countries which saw reasonably good export performance, but even more than that, the revival of both public and private investment, and I think some of that boost might have come related to the electoral activities in the region. This combination of higher domestic demand, reasonably better exports, not just so much of goods but also some revival of tourism, plus, the government support,” Mattoo said.
“…while some aspects of Philippines’ monetary policy may have been tight, fiscal policy seem to us at least to be a little bit more accommodative. And therefore, that is the reason we upgraded,” he added.
Mattoo, however, said the World Bank recognizes that for all countries in the region, “this triple concern of deceleration, higher interest rates and the recourse to the policy instruments that they are making is a concern.”
“In the Philippines’ case, there is also an interesting contrast. That while it comes to agricultural policies, the Philippines has implemented significant liberalization and relied more on transfers in general rather than price subsidies. (But) when it comes to energy and fuel, less (so),” Mattoo said.
For 2023, the multilateral agency sees the economy growing at a slower pace of 5.8 percent.
“Output in Cambodia, the Philippines and Thailand is expected to surpass pre-pandemic levels of output in 2022,” the report said.
According to the report, a revival of tourism is likely to help service exports in countries such as the Philippines, Thailand and many Pacific Island countries.
“But tourist arrivals are still less than 40 percent of what they were before the pandemic in the majority of East Asia and Pacific countries, likely driven by the relatively stricter COVID-19 related restrictions in East Asia and Pacific countries,” the World Bank said.
