The Asean+3 Macroeconomic Research Office (AMRO) has upgraded its growth forecast for the Philippines this year, expecting the economy to post the fastest growth in the Asean+3 region.
According to the Asean+3 Regional Economic Outlook July 2022 update released yesterday, the Philippines is seen to expand by 6.9 percent this year, faster than the 6.5 percent projection in April 2022.
For 2023, the growth outlook is maintained at 6.5 percent.
“We’re very optimistic on the Philippines, we expect growth to be 6.9 percent. The government is targeting seven to eight percent growth for this year. So we are slightly less optimistic than government. But nevertheless, the 6.9 percent is among the highest growth rate in the region,” Hoe Ee Khor, AMRO chief economist, said in a virtual briefing.
“The Philippines was hit badly in 2020, (as it posted a) very sharp decline. But last year was strong rebound (of) 5.6 percent and this year, we expect it to rebound even more (with) 6.9 percent, and the driver for this growth is basically the opening of the economy.
Despite the spike in the infection rate, we expect the economy to remain relatively open because of the vaccination and the virus is relatively mild,” Khor added.
Arsenio Balisacan, the new administration’s socioeconomic planning chief, earlier said expanding by seven to eight percent for this year might be a challenge considering the impact of external developments.
However, growing six percent and above would still allow the Philippines to be one of the fastest growing economies in the region, and it would be remarkable if the Philippines could grow by six to seven percent this year, he said.
The AMRO report showed the Philippines is seen to post the fastest growth in 2022 when compared to economies in Asean as well as China, Hong Kong, Japan and Korea.
Vietnam is seen to come second with a projected 6.3 percent growth.
“We expect Philippines to do relatively well in terms of growth, 6.5 percent is our projection for long-term trend growth. The drivers of growth are domestic demand and also investment, the authorities have Build, Build, Build to improve infrastructure… so that will be one of the drivers for growth as well,” Khor said.
“The BPO (business process outsourcing) sector has been doing very well and we expect it to continue to do well and to expand as well. And also, because it’s a service economy, with opening up less affected by external demand. Even if there’s a downturn in the US, I think that the spillover to the Philippine economy would not be as high as it is for some of the other economies,” he added.
The AMRO report also showed that inflation forecasts for the Philippines were revised upwards to 4.4 percent from 4.1 percent in 2022, and 3.8 percent from 3.5 percent in 2023.
Meanwhile, AMRO shaved down its short-term growth forecast for the Asean+3 region, reflecting the impact of the recent COVID-19 outbreak in China and stronger headwinds arising from the war in Ukraine and tighter global financial conditions.
AMRO has forecasted the Asean+3 region to grow by 4.3 percent this year, slightly lower than its previous forecast of 4.7 percent.
AMRO raised its 2022 inflation forecast for the region to 5.2 percent, up by 1.7 percentage points from April.
Growth is expected to strengthen to 4.9 percent in 2023, while inflation is projected to moderate to 2.8 percent.
