Thailand
Japan think tank upgrades Philippine growth forecast until 2022
MANILA, Philippines — The Japan Center for Economic Research (JCER) expects the Philippine economy to be among the best performers in the region until next year, as the May 2022 polls will significantly drive spending.
In its latest survey, JCER hiked its gross domestic product (GDP) growth forecast for the Philippines for both 2021 and 2022, with the country getting the biggest upward revision in the region.
For this year, JCER now expects the economy to grow by 5.1 percent from its September forecast of 4.3 percent, growing further by 7.1 percent in 2022 from the 6.6 percent forecast earlier.
The Tokyo-based think tank’s latest forecast falls within the government’s revised GDP growth target of five to 5.5 percent for the whole year. The economy is coming off a 9.6 percent contraction in 2020.
“Some economists cited the lighter-than-expected impact from lockdown,” principal economist Masashi Uehara said in JCER’s latest survey.
“Consumption is expected to increase due to the remission of COVID-19, and expectations are rising for increasing spending ahead of the May 2022 presidential election,” Uehara said.
JCER’s quarterly survey collects insights from economists and analysts in the five biggest members in Southeast Asia (ASEAN5): Indonesia, Malaysia, the Philippines, Singapore and Thailand along with India.
Of the six economies, the Philippines got the highest GDP upgrade from JCER. Thailand also saw a 0.5 percentage point upgrade to one percent.
Economic outlooks for Indonesia and Singapore were retained at 3.5 percent and 6.8 percent, respectively. Malaysia had the sharpest downward revision at 0.5 percentage point to 3.3 percent.
India, on the other hand, is expected to recover strongly this year to 9.5 percent from last year’s 7.3 percent contraction. Its forecast was a 0.1 percentage point upgrade.
JCER’s forecast revision came after the Philippines recorded a stronger-than-expected third quarter performance at 7.1 percent even with the reimposition of lockdown measures during the period.
Uehara said the number of newly infected people in the Philippines has significantly dropped over the past weeks from its peak in August and September.
This allowed domestic movement restrictions to be relaxed, prompting expectations to rise for the resumption of normal business operations.
Apart from the elections, other positive factors include acceleration of COVID-19 vaccination, normalization from the virus, expansion of e-commerce and policy reforms.
Nonetheless, coronavirus shock remained the top risk for the Philippines especially due to the emergence of the new Omicron variant.
Meanwhile, JCER said inflation remains a major concern for the Philippines. JCER’s survey showed that headline inflation in the country will likely reach 4.4 percent, significantly higher than the 1.2 to 2.4 percent range within ASEAN.
JCER upgraded forecast for the Philippines is the same as the Bangko Sentral ng Pilipinas’ target of 4.4 percent for 2021. The think tank noted that high energy costs exacerbated the increase in consumer prices.
The Philippine peso is also expected to gradually depreciate toward 2023.
Other risks for the Philippines include rising government debt, increase in commodity prices, and repercussions of the US monetary policy.
Source: https://www.philstar.com/business/2021/12/21/2149152/japan-think-tank-upgrades-philippine-growth-forecast-until-2022