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Business

Economists hike Philippine GDP growth forecast

Lawrence Agcaoili - The Philippine Star
Economists hike Philippine GDP growth forecast
Standard Chartered Bank economist for Asia Jonathan Koh said the bank has upgraded the GDP growth forecast for the Philippines to eight percent from the original target of 7.5 percent this year after a broad-based recovery that resulted in an 8.3 percent expansion in the first quarter.
Miguel De Guzman, file

MANILA, Philippines — Economists are now looking at a stronger economic growth for the Philippines after a faster-than-anticipated gross domestic product (GDP) growth in the first quarter.

Standard Chartered Bank economist for Asia Jonathan Koh said the bank has upgraded the GDP growth forecast for the Philippines to eight percent from the original target of 7.5 percent this year after a broad-based recovery that resulted in an 8.3 percent expansion in the first quarter.

“The first quarter GDP print validates the narrative that the Philippines’ economic recovery has gained traction. We raise our 2022 GDP forecast to eight percent from 7.5 percent to reflect the better-than-expected growth recovery,” Koh said.

According to Koh, the country’s GDP finally rose to pre-COVID levels in the first quarter, with both private and government consumption exceeding 2019 levels on easing restrictions and rise in mobility.

Standard Chartered Bank also noted that the unemployment rate improved steadily since September last year to reach 5.8 percent in March as the National Capital Region (NCR) and nearby provinces shifted to Alert Level 1 from Alert Level 3 in January.

DBS Bank Ltd economist Chua Han Teng said they also hiked their 2022 GDP growth forecast for the Philippines to 7.5 instead of 6.5 percent.

“This also considers positive catalysts from opening dynamics, likely policy continuity under new leader Ferdinand Marcos Jr., but external risks from geopolitics and supply chain disruptions might stoke inflation and hurt consumers’ purchasing power,” Teng said.

Teng said the country posted three successive quarters of growth in the first quarter, allowing real GDP to recover to above pre-COVID levels.

Chua Hak Bin, regional co-head of Macro Research at Maybank Kim Eng, said the Philippine economy may grow by seven percent this year, making it the fastest growing country among the Association of Southeast Asian Nations (ASEAN).

He noted that consumer confidence has been improving in the Philippines as mobility restrictions have eased.

Chua said car sales in March surged by 43 percent to 29,685, while the labor market has rebounded with total employment rising in January, led by manufacturing and services sectors.

Philippine National Bank economist Alvin Arogo said the Lucio Tan-led bank has also raised its GDP growth forecast to 6.8 instead of 6.6 percent this year due to the better than projected expansion in private sector spending amid the meaningful relaxation of restrictions.

“Since the Philippines is still in the process of completely exiting from one of the strictest mobility curbs in the world, the country’s GDP growth in 2022 will largely be driven by the faster recovery of the businesses hardest hit by the lockdowns,” Arogo said.

Arogo said economic reopening would continue to outweigh the drag from higher inflation on consumer spending due to the Russia-Ukraine war.

HSBC economists Aris Dacanay said the British banking giant upgraded its GDP growth forecast for the Philippines to 6.5 instead of 5.7 percent for 2022 and to 5.6 instead of 5.3 percent for 2023 given the recent upside surprise in the first quarter expansion.

“The Philippine economy is beginning to look like it was before the pandemic began,” Dacanay said.

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