ADB: PH economy to perform well despite global headwinds

Growth prospects have dimmed across Asia’s emerging economies amid sharper slowdown in major economies of the world, but the Asian Development Bank (ADB) maintained its upbeat forecast for the Philippines this year.

The ADB in July revised its forecast for full-year growth of Philippine gross domestic product to 6.5 percent from the 6 percent announced in April through its Asian Development Outlook 2022 report. The July forecast was kept in an update to the report launched on Wednesday.

“The normalization of socioeconomic activity will usher the Philippine economy to a steady, prepandemic pace of expansion,” ADB Philippines country director Kelly Bird said in a statement.

“The recovery in tourism and private investments, coupled with sustained public spending on large infrastructure projects and remittances from overseas Filipinos, will bolster the country’s economic recovery this year,” Bird added.

On the other hand, the multilateral lender now sees growth across developing Asia lower at 4.3 percent compared with earlier forecasts—4.6 percent in July and 5.2 percent in April.

For the Philippines, ADB also maintained a growth projection of 6.3 percent for 2023. This is slightly lower than the 2022 forecast due to rising inflation and interest rates, both of which are seen to stifle consumption of goods and services as well as investments.

Price pressures

ADB now expects inflation in the Philippines to clock at 5.3 percent in 2022, even faster than the 4.9 percent forecast in July, which was itself an upward revision from 4.2 percent in April.

This is attributed to the negative impact of natural disasters on domestic agricultural supply, which is seen to lead to higher food prices until the end of 2022.

Still, the updated report said that a sharper slowdown in major advanced economies, heightened geopolitical tensions and possible sustained elevated global commodity prices due to the Russian invasion of Ukraine could make actual growth of the Philippine economy lower than its forecast.

Funding infrastructure

These factors, in addition to lockdowns resulting from China’s zero-COVID policy, also prompted the forecast downgrade for developing economies in Asia.

ADB noted that the Philippine government continued to make as one of its top priorities infrastructure upgrades, including for bridges, expressways, ports and railroads.

The multilateral lender is supporting the government’s flagship infrastructure projects such as the Malolos Clark Railway, construction of which has started and the South Commuter Railway, for which civil works contracts are expected to be awarded soon.

Also ADB-funded is the Edsa Greenways Project, which is intended to improve pedestrian experience along the main thoroughfare Edsa and the Metro Manila Bridges Project, which seeks to help solve traffic congestion in the metropolis.