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Philippines: RCBC estimates 6.5-7% GDP growth in Q1
THE Philippine economy is likely to grow 6.5 to 7 percent this quarter, listed Rizal Commercial Banking Corp. projected, but warned that higher oil prices due to Russia-Ukraine tensions is a key risk to expansion.
RCBC chief economist Michael Ricafort said in a briefing that his forecast took into consideration base effects because the gross domestic product contracted by 3.9 percent in the first quarter of 2021.
“The other growth drivers would be, of course, the elections. There will be a boost to that election-related spending as well as the accompanying increase in infrastructure spending,” he added.
Ricafort went on to say that the estimated first-quarter growth will sustain a full-year gross domestic product (GDP) expansion of 6 to 6.5 percent or higher in 2022.
His forecast is lower than the interagency Development Budget Coordination Committee’s target of 7- to 9-percent growth this year, but higher than the 5.6 percent expansion posted in 2021.
“But, of course, we have to be also realistic with the recent development in geopolitics pertaining to Russia’s invasion and war with Ukraine,” the RCBC economist added, “that could also offset whatever gains that there may be on the further reopening of the economy.”
He said the inflationary impact of Russia-Ukraine hostilities will affect consumers’ disposable income due to increasing commodity prices.
Businesses and industries that might otherwise spend to improve the economy will wind up paying more for common goods, Ricafort added.
“But nonetheless, beyond geopolitics, the growth trajectory not only here in the Philippines but for the rest of the world remains intact as many economies are moving toward herd immunity and economies are moving toward greater normalcy,” he, nevertheless, said.
For his part, Horacio Cebrero 3rd, RCBC’s outgoing senior executive vice president and treasurer, believes that despite the geopolitical turmoil in Europe, the Philippine financial system will stay stable.
This is despite the fact that he admits that the increase in fuel costs, which would lead to inflationary pressures, will have a short-term impact on banks’ lending activity.
“We are in a very, very strong position. When I say ‘we,’ the banking industry is in a very strong position to absorb what is developing in the international markets,” Cebrero said.
He went on to say that authorities have been preparing the industry for several years by beefing up capital ratios and ensuring that bank capital ratios can absorb whatever bad developments occur in the international market.
“We can say proudly and we can clearly see the capitalization of banks, we are at a very strong position whatever happens in the international market in the banking industry,” Cebrero added.
Source: https://www.manilatimes.net/2022/03/03/business/top-business/rcbc-estimates-65-7-gdp-growth-in-q1/1834920