The World Bank revised upward its 2022 growth forecast for the Philippine economy to 6.3 percent from 5.7 percent in April, mainly due to a strong rebound in private-sector consumption/spending and despite concerns of growth deceleration across East Asia and the Pacific (EAP).
In an update of the outlook on the EAP region, the World Bank noted that the global economic slowdown is beginning to dampen demand for the region’s exports of commodities and manufactured goods.
But Aaditya Mattoo, World Bank EAP Chief Economist, said in a press conference that in the Philippines, they observed not only a recovery in both public and private investments, but also a combination of higher domestic demand, improving export earnings, and also some revival of tourism.
“Even though some aspects of the Philippines’ monetary policy have tightened, its fiscal policy seems to us to be a little bit more accommodative, and therefore we upgraded [our growth forecast],” Mattoo said.
This suggests that government spending is offsetting the dampening effect of rising interest rates on private-sector consumption or consumer spending.