NextGen Day

MANILA, Philippines — According to a new analysis released Wednesday by the Asian Development Bank (ADB), the Philippine economy is likely to gain steam this and next year, fueled by increased domestic investment and consumption as influenza restrictions lift, allowing for greater manufacturing and building operations.

The Philippine economy is expected to increase by 6% in 2022, rising to 6.3 percent in 2023, according to the Asian Development Outlook 2022, the ADB’s flagship economic publication.

The services sector will benefit from government steps announced last month to reopen the economy, reduce mobility limitations, increase coronavirus disease 2019 (Covid-19) immunization, and relax international travel restrictions.

“Nearly all indicators point to higher growth for the Philippines this year and in 2023, barring the impact of external factors such as geopolitical tensions that may dampen growth globally, including in the country’s key export markets of Europe and the United States,” said Kelly Bird, ADB Philippines Country Director.

“Policies to increase the resilience of micro, small, and medium-sized firms (MSMEs), which play a critical role in the country’s economic recovery,” Bird continued, “should be strengthened to support the sector’s digital transformation, business innovation, and skills development.”

Under the Skills Up Net Philippines program, the ADB is actively aiding the government in providing employer-led skills training to chosen industries in order to upgrade MSME workers’ competencies.

In March, the metropolis, Manila, and areas on the main Luzon island, which account for almost 70% of GDP, lowered pandemic restrictions to the lowest level possible, as daily Covid-19 cases averaged below 1,000.

Businesses and public transportation may now run at full capacity.

Since February, the government has reopened the country to fully immunized overseas travelers. According to the research, this should improve tourism and employment in the services sector, which accounts for 60% of GDP.

Increased public investment in major, high-priority infrastructure projects will continue to stimulate growth, according to the research, with the government aiming to keep infrastructure spending at over 5% of GDP in 2022, up from 5.8% in 2021.

Economic growth will be aided by recent increases in private investment and the passage of policy reform measures to relax rules on foreign equity ownership and lower the minimum paid-up capital of foreign retailers.

Capital goods imports increased by double digits in January 2022, while bank loans to firms increased by the most in nearly two years during the same time.

In 2021, net inflows of foreign direct investment increased by 54.2 percent year over year, with inflows primarily going into the industrial and utility sectors.

Higher global oil and commodity costs due to geopolitical concerns are expected to push inflation up to 4.2 percent in 2022.

To help public transportation drivers, farmers, and fishermen cope with increased gasoline and production expenses, the government granted fuel subsidies and discount vouchers in March.

As global commodity prices drop, inflation is predicted to slow to 3.5 percent in 2023.

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