The International Monetary Fund on Tuesday maintained its growth forecasts for the Philippines at 6.5 percent in 2022 and 5 percent in 2023 on strong first-half expansion but expressed concern on the impact of global headwinds such as the continuing Russia-Ukraine conflict, elevated inflation and slowdown in China.
It disclosed the forecasts in the October World Economic Outlook released to the media, which mirrored the projections made by an IMF team led by Cheng Hoon Lim who conducted discussions on the Philippine economy for the 2022 Article IV Consultation from Sept. 12 to 26.
The team adjusted the 2022 growth forecast to 6.5 percent from a previous estimate of 6.7 percent, which was also the lower bound of the government’s target range of 6.5 percent to 7.5 percent.
IMF resident representative to the Philippines Ragnar Gudmundsson said in an emailed response to Manila Standard that the forecasts reflected the latest estimates following the Article IV Consultation mission.
“Our assessment is that the Philippine economy has been on the mend in 2022, with growth driven by strong private consumption and investment. GDP growth is projected to reach 6.5 percent in 2022, but the impact of global shocks will weigh on the economy in the coming months and in 2023,” Gudmundsson said.
He said the GDP growth was projected to slow to 5.0 percent in 2023, before picking up to about 6.0 percent in 2024.
The economy grew by 7.8 percent in the first half, following the 8.2-percent and the 7.4-percent expansion in the first and second quarters, respectively. GDP grew by 5.7 percent in 2021, a rebound from the 9.6-percent contraction a year ago due to the pandemic.
Lim said during the 2022 Article IV Consultation for the Philippines the country had successfully emerged from one of the world’s strictest pandemic lockdowns due to sustained reforms and disciplined macroeconomic policies that contained financial vulnerabilities and mitigated the hardships faced by the poor.
“Following a sharp contraction in 2020, the Philippine economy rebounded in late 2021 and accelerated further in the first half of 2022, spurred by strong domestic demand and private investment,” she said.
The October WEO report said that as “storm clouds gather, policymakers need to keep a steady hand.”
“The global economy continues to face steep challenges, shaped by the lingering effects of three powerful forces: the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China,” it said.
“Our latest forecasts project global growth to remain unchanged in 2022 at 3.2 percent and to slow to 2.7 percent in 2023―0.2 percentage points lower than the July forecast―with a 25 percent probability that it could fall below 2 percent,” the report said.