ADB retains GDP growth, inflation forecasts for Philippines

MANILA, Philippines — The Asian Development Bank (ADB) remains optimistic on Philippine economic growth this year as it sticks to its gross domestic product (GDP) and inflation forecasts, despite the continued depreciation of the local currency and damage caused by Super Typhoon Karding.

“We are not looking at any significant changes to the outlook that we just released last week,” ADB director general for Southeast Asia Ramesh Subramaniam said in a virtual briefing yesterday.

The ADB Asian Development Outlook 2022 Update report released last week showed the multilateral lender expects the Philippine economy to grow by 6.5 percent this year, the same forecast it provided in July, but higher than its April forecast of six percent.

ADB’s forecast is at the low end of the 6.5 to 7.5 percent growth goal set by the government for this year.

Subramaniam said the ADB is upbeat on the country’s economy as it is among the countries in Southeast Asia with strong growth in the first half.

The Philippine economy grew by 7.8 percent in the first semester.

“Given the policy consistency that we have seen emerging between finance, central bank, in terms of what needs to be done to address the immediate priorities – food security that we are talking about…social protection and in terms of what monetary policy measures that need to be put in place – we are seeing very strong coordination emerging. So we do not have any particular concerns,” Subramaniam said.

James Villafuerte, senior economist for Southeast Asia at ADB, said in the same event that inflation is not expected to be driven upward by the impact of the recent typhoon that hit the country.

“Although we see that this typhoon will affect Central Luzon, which is part of the food basket of the Philippines, I think we are quite lucky that the typhoon has quickly crossed the country with relatively little damage as what was expected earlier. So I don’t think that inflation will go up because of this,” he said.

Last week, ADB said it raised its inflation forecast for this year to 5.3 percent from the 4.9 percent forecast it provided in July, and the 4.2 percent estimate in April, citing rising global energy and commodity prices.

It also said the negative impact of natural disasters on domestic agricultural supply is likely to lead to higher food prices until the end of the year.

ADB’s revised inflation projection is slightly lower than the Bangko Sentral ng Pilipinas’ 5.4 percent forecast, but higher than the central bank’s two to four percent target for the year.

The country’s headline inflation eased slightly to 6.3 percent in August from 6.4 percent in July, bringing the average for the January to August period to 4.9 percent.

While no changes are being made to the outlook, Subramaniam said the ADB continues to monitor the developments both on the local currency and the impact of the typhoon.