PHOTO: focus-economics.com
Barcelona-based FocusEconomics has upgraded its 2022 growth forecast for the Philippines to 7 percent on the back of sustained mass vaccination and infrastructure buildup.
In a Dec. 16 report, FocusEconomics said this month’s consensus gross domestic product (GDP) forecast for next year among its panel of economists rose from 6.8-percent growth last month. As such, they now expect GDP to expand within the government’s 7 to 9 percent target range for 2022.
“Growth should pick up next year, as vaccination coverage expands and thus stimulates spending. Fiscal and monetary stances should remain supportive, while investment is likely to continue to be boosted by the ‘Build, Build, Build’ investment program,” the group said.
But FocusEconomics flagged potential spoilers to strong economic growth next year, such as COVID-19’s Omicron strain, the presidential elections in May, the implementation of the Supreme Court’s Mandanas-Garcia ruling, which will result in fiscal decentralization, as well as extreme weather risks.
Moving forward, FocusEconomics projected GDP in 2023 to grow by 6.5 percent, also within the government’s 6 to 7 percent goal.
But the group believes that compared to the surprise 7.1-percent GDP expansion during the third quarter, growth in the fourth quarter of this year could slow, due to higher base effects from last year’s Christmas holidays plus lingering downside risks while Omicron spreads worldwide.
“Amid fewer COVID-19 cases, private consumption should be supporting momentum, as suggested by strong import growth in October. Moreover, investment likely continues to be aided by low interest rates and the ‘Build, Build, Build’ public infrastructure program, notwithstanding weakened private sector balance sheets and political uncertainty,” FocusEconomics said.