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By Eireene Jairee Gomez
December 7, 2022 50
THE World Bank on Tuesday raised its 2022 Philippine growth forecast, citing a better-than-expected expansion over the first nine months of the year.
The Washington-based multilateral now expects the country to grow by 7.2 percent, up from 6.5 percent previously, after gross domestic product expanded by just over 7.7 percent as of the end of September.
"[S]trong domestic demand resulted in impressive growth in the Philippines, bringing renewed opportunities for income generation and improvements in the labor market outcomes," World Bank Country Director Ndiamé Diop said in a media briefing.
The expansion, however, was forecast to cool to 5.7 percent next year as high inflation and high interest rates are expected to temper household spending and investments.
"The bad news is that the high domestic inflation is threatening household consumption. The rising interest rates could temper investments and slow global growth could depress the export of demand sensitive products such as electronics going forward," Diop said.
"With all of that, economic growth in the Philippines is therefore expected to slow down next year."
Ralph van Doorn, World Bank senior economist, said the immediate challenge for the government was that of addressing inflation, which climbed to a 14-year high of 8.0 percent in November.
"Addressing inflationary pressure means deploying both monetary and non-monetary measures, for example, including free or importation lower tariffs to local areas to help augment domestic supplies as needed, support agricultural production for essential services, seeds, fertilizers and also to use... rate hikes to address second-round effects," he said.
Diop urged the government to boost initiatives aimed at sustaining investments, particularly in health and education, given the impact of the Covid-19 pandemic.
"Certainly, the pandemic has already met with a worsening of child malnutrition and stunting as well as learning losses in the country," he said.
"So, the focus should be on programs that will impact people and improve their future productivity, earnings and capabilities, and capacity for innovation."
Finding ways to improve productivity in health and agriculture is also essential to reducing poverty and food insecurity, and to achieve the government's target of a single-digit poverty rate by 2023-2028, Diop added.
"It not just reduces poverty and food insecurity directly among farmers. It also reduces poverty and food insecurity in urban areas," he said.
"And finally, it enhances the competitiveness of all industries... makes food more affordable and it increases the purchasing power and well-being of everyone."
