FMIC-UA&P raises PH 2022 GDP forecast
A joint report by First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) raised their growth forecast for 2022 to 7.0 percent from 6.0 percent stating the economic recovery is back on the fast growth lane.
In the January issue of the Market Call, FMIC and UA&P said a slew of upbeat economic data released in December and early January 2022 reinforced the business and consumer optimism for the year.
According to the report, the biggest positive surprise came from employment data in November which blared an all-time high of employed persons at 45.5 million at the back of the huge 1.6 million jobs added during the month, the report cited.
Moreover, industrial output also surged 24.4 percent while IHS Markit Philippines Manufacturing Purchasing Managers’ Index continued to expand to 51.8 in December.
In addition, the report cited, headline inflation in the final month of 2021 eased to 3.6 percent, the first time in 2021 it came within the Bangko Sentral ng Pilipinas target of 2.0 percent to 4.0 percent.
The upbeat economic reports prompted FMIC and UA&P to raise its gross domestic product (GDP) forecast for 2022 by at least one percentage point to between 6.0 percent to 7.0 percent.
“The outsized gain in employment may correct in December, but the momentum spawned by Christmas outlays and election spending should carry the torch at least for H1-2022,” FMIC and UA&P said.
The FMIC and UA&P’s economic projection, however, is still below the government’s target of 7.0 percent to 9.0 percent for 2022.
Meanwhile, FMIC and UA&P kept its inflation outlook at 3.7 percent for 2022 despite elevated crude oil prices.
“We still project full-year inflation at 3.7 percent, as food prices have stabilized in the recent months,” the report said.
FMIC and UA&P also expect that government’s expenditures in 2022 will outperform, as infrastructure spending ratchets up.
“While the peso slightly appreciated in December, the gains have vanished in 2022 with record trade deficits and likely hikes in interest rates in the US, and the USDPHP staying above P51/$ and likely to remain there for most of 2022,” FMIC and UA&P said.