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Philippines’ growth forecast revised up to 6.5% due to positive impact of its lifting of COVID restrictions
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Outlook for developing Asia nudged lower to 4.6% as due to impacts of China lockdowns, monetary tightening in the West and Russia’s invasion of Ukraine
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Southeast Asia growth forecast nudged up to 5% also due to positive impacts of lifting of COVID restrictions and opening of borders
Asian Development Bank has revised up its growth forecast for the Philippines to 6.5% in 2022 for easing its COVID restrictions, and cut its outlook for developing Asia to 4.6% due to the impact of China’s pandemic lockdowns, monetary tightening in the West and the Ukraine war.
In a statement, Manila-based ADB said it marginally upgraded its forecast for Southeast Asia to 5.0% from 4.9% in 2022 as domestic demand benefits also from the continued lifting of COVID-19 mobility restrictions and the reopening of borders in some economies in the subregion.
The bank said it was prompted to revise up the numbers for the Philippines following its relaxation of its COVID-19 mobility restrictions, the expansion of the anti-COVID vaccination program, and a rebound in investment and household consumption.
The GDP forecast revisions were the highlights of the “Asian Development Outlook (ADO) 2022 Supplement: Recovery Faces Diverse Challenges”, which the bank released on July 21. The bank said the Supplement updates its ADO Outlook 2022 published in April.
The Supplement said the Philippine economy will grow at least 6.5% in 2022, up from the bank’s April forecast of 6%. The ADB maintained its 6.3% growth projection for next year.
Downside risks to second-half growth may come from sharper-than-expected slowdowns in major industrial economies, possible sustained elevated global commodity prices, and tighter financial conditions.
“The Philippine economy’s growth momentum has accelerated close to its ideal growth path,” said ADB Philippines Country Director Kelly Bird.
“Strong domestic demand supported by a pick-up in employment and remittance inflows, private investment expansion, and large public infrastructure projects will underpin the country’s recovery from the economic impact of the pandemic.”
Wider Covid-19 vaccination coverage including adolescents and relatively mild impacts from the Omicron variant have allowed the government to ease restrictions from the first quarter, spurring private businesses to expand operations, with the jobless rate falling near pre-pandemic levels.
The unemployment rate was at 6% in May 2022, down from 7.7% a year earlier. Inflation is forecast to quicken to 4.9% in 2022 and 4.3% in 2023 on the back of higher global commodity prices. These are up from ADB’s April forecast of 4.2% in 2022 and 3.5% for 2023.
Reflecting worsened economic prospects, growth forecasts for developing Asia were revised down to 4.6% from 5.2% for 2022, and to 5.2% from 5.3% for 2023.
The bank said the downgrades were due to the impact of China’s COVID lockdowns, more aggressive money tightening in advanced countries, and fallout from Russia’s prolonged Ukraine invasion.
The inflation forecast for developing Asia was revised up to 4.2% from 3.7% for 2022 and to 3.5% from 3.1% for 2023, amid higher fuel and food prices. Inflation pressures in the region are, however, less than elsewhere in the world.
Highlights of the ADO 2022 Supplement
- East Asia’s growth forecast is revised from 4.7% to 3.8% for 2022 due to downgraded 4.0% growth in the PRC and softening global demand.
- South Asia’s growth forecast is lowered from 7.0% to 6.5% for 2022 and from 7.4% to 7.1% for 2023 mainly due to the economic crisis in Sri Lanka and high inflation and associated monetary tightening in India.
- The Caucasus and Central Asia’s growth prospects are raised from 3.6% to 3.8% for 2022 and from 4.0% to 4.1% for 2023, as some economies have withstood the economic fallout from the war in Ukraine better than expected.
- This year’s growth prospects for the Pacific are revised up, from 3.9% to 4.7%, reflecting the stronger-than-expected rebound in tourism in Fiji.
- The inflation forecast for developing Asia is raised from 3.7% to 4.2% for 2022 and from 3.1% to 3.5% for 2023 due to higher fuel and food prices. Inflation pressures in the region are, however, less than elsewhere in the world.
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