London-based IHS Markit predicted a 7-percent growth for the Philippine economy in 2022 in line with its expectation that the gross domestic product would reach $1 trillion by 2033.
IHS Markit presented its 2022 outlook in an economic briefing organized by the Board of Investments. The Department of Trade and Industry uses the IHS Markit Philippines Manufacturing Index to gauge the level of production in the country.
The DTI said while the PMI dropped from a nine-month high of 51.8 in December 2021 to 50.0 in January 2022 following the surge of COVID cases, the country remains on the path to recovery. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month, while a reading below 50 represents a contraction. The figure 50 indicates no change.
“For the Philippines, we are expecting rapid growth in 2022 due to further progress towards normalization of the economy,” said IHS Markit chief economist for Asia Pacific and executive director Rajiv Biswas.
IHS Markit said the strong economic growth forecast would be driven by private consumption and government infrastructure investments.
The GDP expanded 5.6 percent in 2021, following a 9.6-percent decline in 2020 at the start of the pandemic.
Biswas said a key factor that would enhance the attractiveness of the Philippines economy over the next decade is the burgeoning size of the domestic consumer market,
“The Philippines is projected to become one of Asia’s one-trillion dollar economies by 2033, just over a decade ahead,” Biswas said, adding that the Philippines would attract more foreign direct investments from multinationals and drive investments into sectors such as manufacturing and infrastructure.
“Foreign investors will increasingly focus on the opportunities created by the fast-growing domestic consumer market in the Philippines, in addition to its attractions as a hub for producing manufacturing exports such as electronics,” he said.
The latest report of IHS Markit showed that the PMI declined in January because of the surge in COVID-19 cases and the impact of Typhoon Odette that hit large parts of the Visayas and Mindanao.
Manufacturing output fell the most in five months, while new orders declined marginally and export orders shrank at the fifth-quickest rate in the series.
Meantime, employment fell at one of the softest paces in almost two years and incomplete work dropped the least since May 2020. Delivery times were affected by adverse weather conditions with lead times lengthening, the report read.
It said material shortages continued to drive up expenses. Firms, in turn, raised their selling charges at the steepest rate for seven months to protect profit margins. Sentiment moderated to the weakest since August 2021.
The IHS Markit Philippines PMI measures the performance of the manufacturing sector, derived from a survey of 450 manufacturing companies.