Philippines Monthly Economic Developments (May 2022)
The World Bank kept its growth outlook on the Philippine economy on expectations that “strong domestic conditions” would counter external headwinds.
In its “Philippine Economic Update” report released Wednesday, the Washington-based multilateral lender projected the economy to grow 5.7% this year, unchanged from its previous report.
If realized, World Bank’s forecast would fall below the government’s downwardly revised growth target of 7-8%. From 2023 to 2024, the Bank expects the economy to grow at an average of 5.6% annually.
Explaining its forecast, World Bank said growth is expected to benefit from an improving domestic environment, characterized by declining COVID-19 cases, despite a “weak external environment.”
Among the external risks that World Bank identified are rising interest rates abroad and at home, which could cripple credit growth and consumption amid accelerating inflation. A weak Chinese and US economy, both major trading partners of the Philippines, could also weigh on domestic growth.
“The return of robust domestic activity is expected to buoy growth at a time of weak external environment, reeling from a global growth deceleration, rising inflation, and geopolitical turmoil,” the Bank said.
“The outlook faces downside risks from geopolitical uncertainty, abrupt tightening of global financing conditions, and growth deceleration of main trading partners like the United States and China. While the number of COVID-19 cases has been low for a long period, the threat of a new variant-driven surge hangs over the outlook,” it added.