The Asian Development Bank raised on Wednesday its 2022 growth forecast for the Philippines to 6.5 percent from a previous estimate of 6 percent, following the robust expansion of 7.8 percent in the first half.
The new projection was contained in the update of the Asian Development Outlook 2022 released to the media.
“Growth this year should be higher than was projected in April, and higher inflation and a wider current account deficit are expected through 2023. ADO 2022 Update raises the forecast for growth for 2022 to 6.5 percent from the earlier 6.0-percent projection on the basis of the stronger-than-expected first half,” the multilateral lender said.
The economy expanded 8.2 percent in the first quarter and 7.4 percent in the second quarter, bringing the first-half growth to 7.8 percent. The bank said broad-based domestic demand would continue to underpin growth through 2023.
It also maintained the growth forecast for 2023 at 6.3 percent, as financial tightening and a broader pass-through of price pressures would likely weigh on consumption and investment.
The ADO 2022 Update also revised up the 2022 inflation forecast to 5.3 percent from the earlier 4.2-percent projection. It said inflation was expected to remain elevated over the rest of the year on supply-side factors, including elevated global commodity prices.
“Bad weather has constrained the domestic supply of some agriculture commodities, and petitions for additional transport fare increases have been submitted by transport groups to the government,” the report said.
Inflation is seen decelerating to 4.3 percent in 2023 as global oil and non-oil prices start to ease. The cumulative policy rate adjustment will also contribute to slowing inflation, it said.
Meanwhile, the ADB lowered its forecasts for economic growth in developing Asia and the Pacific, amid mounting challenges that include increased monetary tightening by central banks, fallout from the protracted Russian invasion of Ukraine and recurrent COVID-19 lockdowns in China.
The region’s economy is expected to grow 4.3 percent this year, down from the April 2022 forecast of a 5.2-percent expansion.
The 2023 growth forecast was lowered to 4.9 percent from 5.3 percent, while the region’s inflation forecast was raised. Excluding China, the rest of developing Asia is projected to grow by 5.3 percent in both 2022 and 2023.
“Domestic consumer spending and investment are driving growth as economies in the region continue to relax pandemic restrictions, thanks in part to vaccination drives and declining COVID-19 mortality,” it said.
It said the continuing invasion of Ukraine had heightened global uncertainty, worsened supply disruptions and unsettled energy and food markets.