Economists under the Association of Southeast Asian Nations and three of its developed neighbors, or ASEAN+3, project accelerated growth in the Philippines this year averaging 6.5 percent in terms of the gross domestic product (GDP).
Preliminary assessments by the ASEAN+3 Macroeconomic Research Office or AMRO show continued robust growth for the $361 billion economy this year and next.
“Continued fiscal support and a high vaccination rate will help keep the economy relatively open and sustain the recovery momentum,” Dr. Siu Fung (Matthew) Yiu said in a statement sent out of Singapore on Friday.
The Philippines grew by 5.6 percent last year and forecast by the World Bank to race further and grow 5.9 percent this year and 6 percent next year.
Dr. Siu and colleagues in AMRO calculated the country’s growth path based on online consultations with Manila authorities just at the time when Russia conducted a full-scale invasion of Ukraine.
The consultation focused on the development of the COVID-19 pandemic and the country’s vaccination progress, the status of economic recovery, key risks and challenges, and policy responses to ensure a robust recovery in the short-term, while minimizing the lasting impact from the pandemic in the longer term.
AMRO economists noted last year’s recovery represented a turnaround from previous year’s contraction by 9.6 percent on the basis of government spending, rebound of economic activities from a low base as well as higher export and services receipts.
“For 2022, public expenditure will continue to be the main driver of growth, with private sector recovery gaining momentum with the reopening of the economy, supportedby better economic prospects, improving confidence, and favorable external demand.
“Headline CPI (consumer price index) inflation should decline to 3.7 percent in 2022 and 3.3 percent in 2023, from the high 3.9 percent recorded in 2021. However, a further spike up in global oil prices due to geopolitical conflicts poses upside risk to the inflation outlook in 2022.
“While the labor market has rebounded strongly, unemployment remains high, and the quality of employment has deteriorated,” the AMRO economists said.
They also said resurgent COVID-19 infections and impaired business balance sheets are key risks to the growth outlook.
But while global interest rates and capital flow volatilities are seen rising in the months ahead as conditions tighten, the Philippines is well situated to “weather the adverse impact” although the local currency the peso could come under some pressure, the economists said.
They consider the overall fiscal policy stance consistent with the expected recovery but that the Bangko Sentral ng Pilipinas needs to remain accommodative to sustain the growth momentum.