ADB sees economy growing 6% in 2022
By Robina Asido
The Philippine economy will grow six percent this year due to strengthening domestic investment and consumption, an Asian Development Bank (ADB) said in its outlook on Wednesday.
The ADB said the easing of COVID-19 restrictions to Alert Level 1 in Metro Manila and other parts of the country last month "will greatly benefit the service sector, which accounts for 60 percent of GDP."
"The further lifting of COVID-19 mobility restrictions will boost consumer sentiment and facilitate investment," it stated.
The report noted that the GDP growth is expected to reach 6.3 percent by 2023.#
On Tuesday, Philippine economic managers said they set a growth rate of seven to nine percent in 2022 but acknowledged that external factors could affect the goal.
The ADB report said unemployment rate is expected to decline further as more businesses resume their operations or increase their capacities. Tourism and employment in services sectors were boosted since February when travel restriction eased in the Philippines.
"Tourism’s share of GDP fell to 5.4 percent in 2020 from 12.8 percent in pre-pandemic 2019. Tourism is a key source of jobs, accounting for 13.6 percent of total employment in 2019," it said.
It also noted that "Increased public investment in large projects will continue to boost growth, with the government aiming to sustain infrastructure spending at over 5 percent of GDP in 2022 after 5.8 percent in 2021."
The ADB noted that election-related spending ahead of national elections in May will provide a modest lift to aggregate demand.
It stressed the need to boost revenue growth to narrow the fiscal deficit while meeting vital development expenditure needs.
"As economic recovery accelerates, revenue will continue to pick up. The government’s decision to maintain excise taxes on petroleum products, despite calls to suspend them to temper spikes in pump prices, will help sustain revenue," it said.
The ADB is expected the inflation rate to increase to 4.2 percent this year and will decelerate to 3.5 percent in 2023 as global commodity prices will moderate.
"The current account deficit is projected to widen to 3.2 percent of GDP in 2022 and marginally narrow to 3.1 percent in 2023, as faster economic growth boosts imports. Higher oil prices this year will also drive up import costs. Growth in merchandise exports will be moderate compared with imports," the report said.
It added that the "rising remittances and services exports, including business processing outsourcing and tourism receipts, will help trim the current account deficit." DMS
