Capital Economics: Near-term PH outlook improving

As the Philippines remains relatively unscathed from the fresh Omicron-induced surge in infections being felt across the region, UK-based Capital Economics expects robust economic growth for the country this year despite lingering high inflation risks.

“The near-term outlook for the economy is improving. Cases of COVID-19 have dropped back sharply. The government has eased restrictions and our mobility tracker shows that the movement of people is now above its prepandemic level for the first time,” Capital Economics said in a March 29 report.

“The labor market held up well at the start of the year, with the unemployment rate falling to a postpandemic low of 6.4 percent in January,” it added.

The government had nonetheless conceded that the number of jobless Filipinos would have been smaller than the 2.93 million at the start of this year if not for the stricter restrictions imposed during the Omicron episode after the holidays.

As a result of indirect, spillover effects on the world economy of Russia’s invasion of Ukraine, especially on prices of imported oil and food items, Capital Economics recently cut its 2022 growth forecast for the Philippines to 7.2 percent from 8 percent previously. The government is targeting 7-9 percent gross domestic product growth this year.

“The recovery is starting from a low base. And the consumption-led economy is vulnerable to the global surge in commodity prices due to the war in Ukraine, which will leave a large dent in consumer purchasing power,” Capital Economics said.

Even if the Philippine economy grew at the pace it projected, the think tank estimated domestic output would remain 13-percent below its prepandemic growth trend by end-2022.