August 8, 2022

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PHL economy seen to expand 6.5% this year

2 min read

MAYBANK INVESTMENT Banking Group slashed its growth forecast for the Philippines this year, amid the increasing possibility of a recession in the United States, China, and the European Union (EU).

Maybank on Tuesday said it lowered the gross domestic product (GDP) growth forecast for the Philippines to 6.5% this year, from the 7% projection it gave in January.

The latest forecast is still within the government’s 6.5-7.5% target for the year, and faster than the 5.7% expansion in 2021.

Despite the downgrade, Maybank said the Philippine GDP growth will be the second fastest among the Association of Southeast Asian Nations (ASEAN) member countries for this year, after Vietnam’s 6.9%.

“We do see a rising probability of a recession because of a series of factors like the Russia-Ukraine war which will likely cause Europe to go into recession… China, US, and the EU are major export destinations for ASEAN-6,” Maybank economist Ju Ye Lee said in a webinar on Tuesday.

Ms. Lee said a 1% decline in China’s GDP growth “inevitably results in a decline in GDP growth for ASEAN,” although mainly Singapore, Thailand, and Malaysia.

“But if you look at the impact on the Philippines or Indonesia, they are more domestic oriented economies. The impact will likely be softer,” she said.

Maybank also lowered its 2022 growth projection for ASEAN-6 to 5%, from 5.4% previously.

For 2023, the Philippines is expected to grow by 6.2%, slightly below the government’s target of 6.5-8%. This is also higher than the average 4.6% GDP growth for ASEAN-6 expected in 2023.

INFLATION
Meanwhile, Maybank raised its average inflation forecast for the Philippines to 5.3%, from the projection of 2.8% given in January, as it expects inflation to peak in the third quarter.

Inflation rose to a near four-year high of 6.1% in June, the third straight month it settled above the BSP’s 2-4% target band. Year to date, inflation stood at 4.4%, still below the BSP’s 5% average inflation…

Neil

2022-08-02 12:32:02

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