Economic boom in July 2022
With the Philippines ranked last place in the Bloomberg Global Resilience index, second to the last in Nikkei Asia Recovery Index, eighteenth in the world in the number of COVID infections, and having a 4% GDP growth in the first half of 2021 after a 9.4% GDP meltdown in 2020, it is very difficult to project an economic boom for the Philippines in 2022. But there is an 80% probability that starting July 2022, the Philippine economy will achieve an annualized GDP growth rates in the last two quarters of 2022 at double digits, in the 10% to 11%, even and given the incompetence and inadequacies of the current government.
The world economy is on the mend. Many countries are growing their economies at varying rates of growth with the US and Europe at 3% to 4%, exceeding their pre-pandemic growth rates. China, Vietnam, Indonesia, and Malaysia are growing in the 6% to 7% range, and the laggard countries including the Philippines in the 3% to 4% range. The IMF, World Bank, international banks, and economic think tanks are all in these together, that they are now advocating the tapering or reducing the fiscal and monetary stimulus that governments and central banks have been providing, to avoid higher inflation in many countries. This is also to contain the unsustainable levels of government borrowings and fiscal deficits, that all governments have been doing to address the public health COVID problems and the economic recessions. The supply chain disruptions caused by lockdowns and border restrictions are slowly easing up, and material shortages will normalize in 12 months. Trade volume should be at the 2019 level by end of 2022. Consequently, as the consumption component of GDP recovers, the investment component from the government and private sector will follow. Investment in green infrastructures, renewable energy, and technology are expected to be massive.
In the public health aspect, the world is learning how to live with the pandemic. While there are infection resurgences in some countries, the vaccines are containing the mortality rates, lockdowns are loosening, and borders are opening. By the end of the year, 70% of the world population will be vaccinated, and many countries will be on booster shots for their population. More vaccines and medicines will be available, including a pill that will mitigate the COVID infection. It is also interesting to note, that the Spanish Flu which was also a virus, lasted two years, which could be indicative of the life cycle of viral pandemics.
The Philippines, among the countries with porous borders, will benefit from these worldwide trends in the economy and public health. As we are a consumption-driven economy, domestic consumption will surge as the coming May 2022 election spending will defer the monetary tightening and fiscal contraction. The opening of countries to our OFWs will also increase inward remittances, and the BPOs which stayed buoyant even during the pandemic will grow more. There will be ample liquidity for consumption and investment in 2022. These will lead to a double-digit, 10% to 11% annualized GDP for the 3rd and 4th quarters of 2022, making the Philippine economy grow by 7% to 8% for the whole year.
However, there are major factors and obstacles that may prevent this Philippine economic boom to happen and these are all political. The inane and erratic government actions on the pandemic and the graft and corruption issues, the misguided political strategy and tactics to stay in power, the confrontational attacks on the legislative and judiciary are all leading to potential political and social unrest. A manipulated and tainted election will be disastrous. These are all confidence sapping on the country’s economy and will dampen consumption and investments. This will be the deal breaker. So, we must choose and elect the next president carefully and wisely. A competent and morally correct president who inspires confidence.
- Latest
