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The Philippines’ mainly consumption-driven economic growth will be beset by high inflation and shrinking savings amid the prolonged COVID-19 pandemic, UK-based think tank Pantheon Macroeconomics said.
In a report on Friday, Pantheon Macroeconomics chief emerging Asia economist Miguel Chanco said that “sales volumes in the Philippines are plateauing below the prepandemic level, disconcertingly,” citing the volume of net sales index in the February monthly integrated survey of selected industries (Missi) report on Thursday.
Chanco’s estimates showed that net sales, while growing double-digits year-on-year, remained about 4-percent below 2019 levels. “Crucially, the picture looks set to get worse before it gets any better, with the sales data yet to reflect the recent surge in price pressures, sparked by the invasion of Ukraine in late February.”
In a report on Wednesday, Chanco jacked up his 2022 inflation forecast for the Philippines to 3.9 percent from 3.5 percent previously, remaining within the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4 percent target band of manageable price hikes.
The BSP’s own projection for this year was an above-target 4.3-percent average rate of increase in prices of basic commodities amid global oil and commodity price shocks wrought by the Ukraine-Russia war.
“An acceleration in GDP (gross domestic product) growth this year isn’t a given, in spite of the half-hearted and incomplete bounce in 2021 and the country’s likely more sustainable exit from COVID-19-crisis mode,” Chanco said.