DESPITE the effects of the pandemic and the Russian-Ukrainian war, the Philippine economy is projected to grow 6-6.5% this year, economists said on Wednesday.
Dr. Victor Abola, director of the Asia-Pacific University’s (UA&P) Strategic Business Economics Program, said the country’s gross domestic product (GDP) is projected to rise 6 percent this year, but noted that inflation will still be above 2- percentage forecast of the government. to a 4 percent target driven by the continued rise in oil prices.
“We expect faster growth in 2022 and above-target inflation, but should return to the target next year,” Abola said during a mid-2022 business economics briefing hosted by the Business Economics Club and UA&P.
“GDP growth rates [projection is] by 6 percent led by the industry sector. The service industry is still catching up due to the pandemic,” he added.
His forecast is higher than the 5.7 percent economic growth recorded last year. It is also at the bottom of the government’s growth target of 6-8 percent for the year.
In the meantime, inflation is expected to settle at 5 percent this year, 4 percent in 2023 and up to 3 percent in 2024.
Abola said that despite the effects of the pandemic and the Russian-Ukrainian war, the economy is better able to withstand headwinds because it is in “a better economic situation than during the last crisis.”
ING Manila Senior Economist Nicolas Mapa, for his part, also agreed that the outlook for economic growth “still looks very positive”, but also noted that inflation will continue to rise in the near future.
“Actually, I’m a bit more optimistic about 6-6.5% [growth in 2022]”, he said, adding that the economy has the opportunity to really grow as long as Covid cases are under control.
However, Mapa said inflation is expected to average 5.5 percent this year.
“We see that inflation is really rising, and because of this, BSP will have to raise interest rates,” he said.
Mapa said BSP is expected to raise its discount rate by another 100 basis points this year, bringing the discount rate to 3.50 percent by the end of 2022.
Meanwhile, UA&P Center for Research and Communication director Bernardo Villegas stressed that the next administration should pay more attention to the agricultural sector in the future.
Villegas said President-elect Ferdinand “Bongbong” Marcos Jr. should focus on achieving food security, consolidating farms fragmented as a result of agrarian reform without dispossessing small farmers, and digitalizing the agribusiness supply chain.
In addition, Villegas also cited the need for a full resumption of face-to-face classes to help the economy grow at a faster rate.
“We have to get back to face-to-face classes. And, in fact, that would be one way to achieve the 8 percent growth rate this year and the 6-7 percent more conservatively projected for 2023 and beyond. , “he said.