AMRO raises PH 2022 GDP forecast to 6.5%
The ASEAN+3 Macroeconomic Research Office (AMRO) has raised this year’s economic growth outlook for the Philippines to 6.5 percent from 6.2 percent on the back of robust government expenditures and recovering private sector spending.
During a virtual briefing on Tuesday, April 12, Hoe Ee Khor, AMRO chief economist, said the country’s economy, as measured by gross domestic product (GDP), is expected to grow by 6.5 percent this year.
AMRO’s latest projection bested the 6.2 percent estimate released last Jan. 15, but it is still below the government’s target band of seven percent to nine percent.
“The Philippines registered 5.6 percent growth last year and this year we expect growth to improve to 6.5 percent, and this will be led by government spending and also recovering private sector spending,” Khor said.
However, the AMRO economist noted that the 2022 growth will be mainly led by government spending, as private consumption remains constrained by some Covid-19 restrictions.
“The Philippines economy is seen with a pretty large output gap, so we expect that private spending will bounce back very rapidly once the economy is open much more fully,” Khor said.
For 2023, the regional macroeconomic surveillance organization is also looking at a 6.5 percent GDP growth pace.
In a separate report, AMRO said the country’s economic recovery has remained on track despite recurrent waves of Covid-19 infections in the beginning of the year.
“Recovery slowed due to a new wave of infections in March 2021; however, it regained momentum in third-quarter amid the second wave of infections as targeted containment measures lessened the adverse impact of mobility restrictions,” AMRO said.
But AMRO also warned that the economy continues to face several risks and challenges, citing that a potential resurgence of Covid-19 infections remains the biggest threat to the recovery in the short term.
Likewise, firm solvency continues to pose a risk to the financial health of the banking sector, AMRO said.
“The impact from these two risks may have abated somewhat; however, capital flow volatility is set to rise in 2022 as global financial conditions tighten,” AMRO said.
“In addition, some lasting damage caused by the pandemic as well as new trends catalyzed by the pandemic, have become clearer, raising the urgency for the authorities to take action to ensure resilient, sustainable, and inclusive long-term growth,” the report added.