Economists see strong PH GDP growth in first quarter


The Makati skyline. (File photo by GRIG C. MONTEGRANDE/Philippine Daily Inquirer)

MANILA, Philippines — The Philippine economy likely weathered Omicron’s surge earlier this year and sustained growth in the first quarter — estimated by economists at between 5.5% and 8.3% year-on-year.

Beyond the possibly strong gross domestic product (GDP) performance of late March, which the government will report on May 12, economists monitoring the Philippines have flagged high debts and a gaping budget deficit, high inflation that could temper consumer spending, as well as some excess baggage carried by major presidential candidates likely to win the election, which could slow the Philippines’ flight to economic recovery this year. (See related story on page A3)

On Sunday, Socio-Economic Planning Secretary Karl Kendrick Chua said in a statement that the Philippine economy will “return to pre-pandemic growth this year as the country continues to build on progress made to recover from the COVID-19 since the first half of the administration”.

Chua, who heads the state’s planning agency, the National Authority for Economy and Development (Neda), declined to say whether first-quarter output is likely to have already returned to pre-COVID levels. -19, pending official report from the Philippine Statistics Authority (PSA).

Soaring commodity prices

Of 18 first-quarter GDP growth forecasts collected by the Inquirer last week, Emilio Neri Jr. of the Bank of the Philippines Islands had the highest estimate of 8.3%.

But Neri said “the trade shock and destructive effects of soaring commodity prices on aggregate demand” – caused by Russia’s invasion of Ukraine – have tempered his growth expectations for the year. 2022 at 6-6.5% versus 7-7.5% previously, especially if oil prices remained near $100 a barrel.

Economic reopening

The government is aiming for a GDP expansion of 7-9% this year on the basis of further economic reopening by dismantling strict pandemic restrictions and stepping up mass vaccination. However, most economists polled by the Inquirer said actual growth in 2022 would fall below the target, up to 4.5%, according to estimates by Miguel Chanco of Pantheon Macroeconomics.

Even the more optimistic estimate of 7.5%, by Alex Holmes of Capital Economics, was closer to the lower end of the growth target range. “Even our forecast of above-trend growth of 7.5% this year is consistent with the fact that the economy will be 13% weaker by the end of this year than if the pandemic had never happened. produced,” London-based think tank Capital Economics said in a statement. May 6 report.

For the first quarter of 2022, growth projections varied widely: 7.6% year-on-year for Ser Percival Peña-Reyes of Ateneo de Manila University; for Alvin Joseph Arogo of the Philippine National Bank, 7.4%; Goldman Sachs Economics Research, 7.2%; Luis Gerardo Limlingan of Regina Capital, Michael Ricafort of Rizal Commercial Banking Corp., Robert Dan Roces of Security Bank and Rajiv Biswas of S&P Global Market Intelligence, 7%; Patrick Ella of Sun Life Financial, 6.9%; Holmes, 6.7%; Jonathan Ravelas of BDO Unibank, 6.5%; Domini Velasquez of China Bank and Makoto Tsuchiya of Oxford Economics, 6.3%; Han Teng Chua of DBS, 6.2%; HSBC Global Research and Nicholas Antonio Mapa of ING, 6.1%; and Chanco, 5.9%.

Ruben Carlo Asuncion of UnionBank of the Philippines had the least optimistic first-quarter growth forecast of 5.5% year-on-year, but he said it was “robust enough” given the contraction in GDP a year ago, when the worst post-war recession dragged on into the first quarter of 2021 due to the then-extended COVID-19 quarantine measures.

For Peña-Reyes, “it could be difficult to achieve” the growth target of 7 to 9% over the full year.

“As developed economies adjust to the pandemic, many are feeling the impact of prolonged port congestion and supply chain disruptions leading to delays in the movement of production. These have caused inflation to accelerate to twice the average in many developing countries…Central banks need to tighten monetary policy by raising interest rates to counter inflation,” explained Peña- Kings.

“We have already felt the headwinds of rising oil prices and its translation into higher inflation. By June, the BSP will likely raise interest rates. The peso is currently trading 10% lower than a year ago. With the country dependent on imports, including food, we are certainly passing on higher prices to our economy,” added Peña-Reyes.

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