ADB sees strong GDP growth for Philippines in 2022
International Business News – A strong rebound in domestic demand will support strong growth in the Philippine economy this year as liquidity restrictions on coronavirus disease (Covid-19) ease in 2019, despite rising inflation due to global and local price pressures, according to a report released by the Asian Development Bank (ADB) on Wednesday.
According to the latest Asian Development Outlook (ADO) 22022 report, the Philippines’ gross domestic product (GDP) will grow by 6.5% in 2022, the same as the July forecast but higher than the bank’s 6% forecast in April.
The growth forecast for 2023 remains unchanged at 6.3%, as both tighter monetary policy and accelerating inflation will dampen domestic demand.
Inflation is expected to rise to 5.3% in 2022, up from 4.9% projected in the April U.S. Outlook 2022 report and 4.2% projected in July, due to a sharp rise in global energy and commodity prices.
The negative impact of natural disasters on domestic agricultural supplies could lead to higher food prices through the end of the year.
The inflation forecast for 2023 remains at 4.3%, as a return to steady economic growth will keep inflation relatively stable and energy prices are likely to decelerate.
The normalization of socioeconomic activity will lead the Philippine economy to a steady pace of pre-pandemic expansion, and a recovery in tourism and private investment, coupled with continued public spending on large infrastructure projects and remittances from overseas Filipinos, will drive the country’s economic recovery this year,” said Kelly Bird, ADB’s country director for the Philippines. ”
However, according to the report, downside risks to the growth outlook could come from a sharp slowdown in major developed economies, heightened geopolitical tensions, and a continued rise in global commodity prices due to the Russian-Ukrainian conflict.
Entertainment, tourism and restaurant spending rebound in the first half of 2022, with household consumption rising 9.3% from 0.9% in the first half of 2021. It was the most important contributor to GDP growth in this period.
Services output grew 8.7% in the first half of the year, with a broad-based expansion across the sector. This contributed to steady overall employment growth, with 5.7 million jobs added from July 2021 to July 2022, two-thirds of which were in services, mainly wholesale and retail trade.
Infrastructure upgrades, including bridges, highways, ports and railroads, remain one of the government’s top priorities.
Public spending on infrastructure this year and next is planned to be as high as 6% of GDP to help improve the country’s business environment and competitiveness.
ADB-supported government flagship projects include the Malolos Clark Rail Project and the South Commuter Rail Project, both part of a north-south commuter rail system that will provide safe, fast and efficient transportation linking Metro Manila with the northern and southern provinces of Luzon.
Construction of the Malolos Clark project began during the pandemic, while the civil works contract for the South Commuter project is expected to be awarded soon.
ADB is also funding the EDSA Greenway Project and the Metro Manila Bridge Project (designed to help address traffic congestion in the metropolis), which aims to improve the pedestrian experience along the EDSA main road in the capital.