IMF hikes 2022 PH GDP forecast to 6.5%

The International Monetary Fund (IMF) has slightly hiked its 2022 gross domestic product (GDP) growth forecast for the Philippines to 6.5 percent, even as it expects headline inflation to hit the upper end of the government’s target band of manageable price hikes.

The Washington-based multilateral lender’s World Economic Outlook (WEO) report for April 2022 released on Tuesday night (Manila time) showed a higher growth projection for the Philippines for this year, from 6.3 percent previously. But the growth estimate remained below the government’s 7 to 9 percent goal for 2022.

For 2023, the IMF expects a GDP expansion of 6.3 percent, within the Philippine government’s 6 to 7 percent target for next year. Moving forward, the lender sees 6.5-percent growth in 2027.

The WEO report did not say why it was more optimistic about the Philippines’ economic growth in 2022; the IMF’s resident representative in the Philippines Ragnar Gudmundsson was unable to respond to an emailed query as of press time.

The IMF estimated headline inflation averaging 4 percent this year, before easing to 3.4 percent next year.

The Bangko Sentral ng Pilipinas (BSP) had projected the rate of increase in prices of basic commodities to average 4.3 percent in 2022—above the 2 to 4 percent target range—amid lingering risks from high global oil and commodity prices amid the Ukraine-Russia war.

Last January, Gudmundsson urged the Philippines to maintain its reform momentum “including during the upcoming election period, as it has been through the pandemic.”

“It will be important to accommodate expenditure for social services to fund health-related programs and provide cash subsidies for the hardest-hit sectors, and to ensure that vital infrastructure investments under the ‘Build, Build, Build’ program contribute to the economic recovery and create job opportunities,” Gudmundsson had said.

The government will give away a total of P47.5 billion in financial assistance to vulnerable sectors most badly hit by expensive oil wrought by Russia’s invasion of Ukraine.

As for infrastructure development, the latest Department of Budget and Management (DBM) data on Tuesday showed that the national government’s expenditures on infrastructure and other capital outlay declined 16.3 percent to P90 billion during the first two months of 2022 from P107.4 billion a year ago.

In a report, the DBM blamed the lower end-February infrastructure disbursements on “the timing of payables for completed projects of the Department of Agriculture, ongoing road infrastructure projects of the Department of Public Works and Highways, foreign-funded rail transport projects of the Department of Transportation, and releases for the revised Armed Forces of the Philippines modernization program under the Department of National Defense.”

“The prohibition on public spending for infrastructure and other projects as mandated by the Omnibus Election Code might temporarily affect the implementation of some programs and projects, and hence could likely result in muted disbursements during the 45-day election ban period. Nevertheless, the Commission on Elections has granted the petition of some agencies for their respective programs to be exempted from the said ban,” the DBM said.

This year, the government would spend a larger P1.27 trillion, equivalent to 5.9 percent of GDP, on infrastructure. Last year, total public infrastructure spending hit a record P1.12 trillion or 5.8 percent of GDP.