Manila-based Asian Development Bank (ADB) is projecting the Philippine economy to accelerate this year and in 2023 on the back of rising domestic investment and consumption as pandemic restrictions eased, allowing for more manufacturing and construction activities.
In its flagship publication, the Asian Development Outlook 2022, the multilateral lender said the country’s gross domestic product (GDP) is seen to grow by 6% in 2022 and accelerate further by 6.3% in 2023.
Government measures issued last month to reopen the economy, lift mobility restrictions, expand coronavirus disease (COVID-19) vaccination, and relax international travel restrictions will boost the services sector, according to the ADB.
“Nearly all indicators point to higher growth for the Philippines this year and in 2023, barring the impact of external factors from geopolitical tensions that may dampen growth globally, including in the country’s key export markets Europe and the United States,” said ADB Philippines country director Kelly Bird.
“Policies to build the resilience of micro, small, and medium-sized enterprises (MSMEs), which play a vital role in the country’s economic recovery, should be strengthened to support the sector’s digital transformation, business innovation, and skills development,” added Bird.
The ADB noted it is currently assisting the government to provide employer-led skills training to selected sectors to upgrade MSME workers’ competencies under the Skills Up Net Philippines program.
Metro Manila and areas on the main Luzon island, which account for about 70% of GDP, shifted to the lowest level of pandemic restrictions in March, as daily COVID-19 cases averaged below 1,000, according to the bank.
It added that businesses and public transport are now allowed to operate at full capacity.
The government has, likewise, reopened the country to fully vaccinated international travelers since February.
This should boost tourism and employment in the services sector, which accounts for 60% of GDP, the ADB said.
The lender added that increased public investment in large, priority infrastructure projects will continue to boost growth, with the government aiming to sustain infrastructure spending at over 5% of GDP in 2022 from 5.8% in 2021.
The ADB forecasts inflation to increase to 4.2% in 2022 on pressures from higher global oil and commodity prices due to geopolitical tensions.
In March, the government issued fuel subsidies and discount vouchers to public transport drivers, farmers, and fisherfolk to help them cope with rising fuel and production costs.
Inflation is expected to decelerate to 3.5% in 2023 as global commodity prices moderate, the ADB said. —KG, GMA News