ADB raises Philippine economic growth forecast to 6.5% in 2022

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International Business News  –  The Asian Development Bank has raised its growth forecast for the Philippine economy, taking into account the easing of Covid-19 restrictions and aggressive Covid-19 vaccination programs in the Philippines.

Citing a supplement to its Asian Development Outlook 2022, the lender said Philippine GDP growth will reach 6.5 percent in 2022, up from 6 percent in its April forecast.

So far, the Philippines has seen faster-than-expected economic growth of 8.3%, compared to 7.8% in Q4 2021 and -3.8% in Q1 2021.

The ADB said in its report that the Philippine economy is expected to grow faster than initially expected in 2022 as the country’s COVID-19 liquidity restrictions ease, the COVID-19 vaccination program expands, and investment and household consumption rebound.

For 2023, ADB maintained its growth forecast at 6.3 percent.

However, it said downside risks to growth in the second half of 2022 could come from a larger-than-expected slowdown in major industrial economies, a possible continued rise in global commodity prices and tighter financial conditions.

“The Philippine economy’s growth momentum has accelerated and is close to its desired growth path. Rising employment and remittance inflows, expanding private investment and strong domestic demand supported by large public infrastructure projects will underpin the country’s recovery from the economic fallout of the pandemic,”said Kelly Bird, ADB’s head of Philippines affairs.

The ADB noted that wider Covid-19 vaccination coverage and the smaller impact of the Omicron sub-variant enabled the government to ease restrictions starting in the first quarter of this year.

This, in turn, spurred most private businesses to resume expanding operations, and the unemployment rate fell to near pre-pandemic levels, it added, noting that the unemployment rate in May 2022 was 6%, down from 7.7% a year ago.

Inflation is expected to accelerate to 4.9% and 4.3% in 2022 and 2023, respectively, up from 4.2% and 3.5% in 2022 and 2023, respectively, in ADB’s April forecasts, due to higher global commodity prices.