With looming headwinds ahead, the Philippine Chamber of Commerce and Industry (PCCI) has expressed cautious optimism about the country’s economy this year.
PCCI president George Barcelon said he expected economic growth to sustain a “healthy pace” in the first half of the year owing to the further easing of pandemic curbs.
“The mitigation of COVID-19 and opening of on-premise schooling will add to economic activities. The government’s plans to continue infrastructure spending and massive housing projects for the homeless will certainly give impetus to our economy,” Barcelon said in a statement.
The PCCI official said the travel and leisure industries were expected to rebound further this year, further aiding the recovery of the economy.
“The recent trip of President [Marcos] has achieved China’s support for our tourism and agricultural sectors,” he said, referring to the three-day state visit of the President in the East Asian country last Jan. 3 to 5.
Barcelon said he still expected the Bangko Sentral ng Pilipinas (BSP) to increase policy rates, mirroring the actions of the United States and the European Union to tame inflation.
In theory, central banks increase rates to make borrowing costs higher. Inflation will ease with consumers spending less.
The BSP again raised the local key rate by 50 basis points last December, bringing it to 5.5 percent.
“[An] issue of concern is for the government to find solutions [to] high food prices which have heightened the clamor for big wage adjustments that could lead to even higher inflation,” said Barcelon.
“This is a vicious cycle that could stunt business and negatively impact the competitiveness of the export sector,” he added, noting that such a cycle also posed risks to both job creation and sustainability.
Inflation further went up to 8.1 percent last December, bringing the 2022 average to 5.8 percent.
According to the Philippine Statistics Authority, the December print was driven mainly by the faster rate of increases in the prices of vegetables, rice and fruits. INQ