Moody’s Analytics hikes Philippine GDP growth to 6.2%

2nd fastest in ASEAN

MANILA, Philippines — Moody’s Analytics has upgraded its gross domestic product (GDP) growth forecast for the Philippines from 5.6 percent to 6.2 percent this year as the country continues to recover from the impact of the pandemic.

This will make the Philippines the second fastest-growing economy in the Association of Southeast Asian Nations (ASEAN), with Vietnam leading at 6.5 percent.

The growth projection for the Philippines is faster than Indonesia’s 5.1 percent, Malaysia’s 5.4 percent, Singapore’s 4.6 percent, Taiwan’s 4.1 percent and Thailand’s 3.2 percent.

After plunging into recession with a GDP contraction of 9.6 percent as the economy stalled due to strict COVID lockdowns in 2020, the Philippines bounced back with a growth of 5.6 percent last year, exceeding the revised government target of five to 5.5 percent.

For this year, the Cabinet-level Development Budget Coordination Committee (DBCC) sees a faster GDP growth of seven to nine percent.

In its latest Asia Pacific Outlook report, Moody’s Analytics said the current growth figure brings COVID back into the picture with the Omicron variant after a strong fourth quarter.

The research arm of the Moody’s Group said the Philippines recovered quickly from a weak third quarter last year with a remarkably strong rebound in the year’s final quarter.

“Available data show that Indonesia, Malaysia, the Philippines, Singapore and Vietnam all posted strong fourth-quarter growth, with real GDP in all but Malaysia and the Philippines now above pre-pandemic levels,” Moody’s Analytics said.

As domestic economies continue to open and international trade remains a driving force, Moody’s Analytics said one of the biggest remaining drags on the region’s economy is international travel.

“The year is starting out slower for much of the region largely because lingering COVID-19 restrictions muted the normal seasonal spending in much of the region during the Lunar New Year holiday in the first week of February,” it said.

It added that persistently high energy prices and stronger domestic demand would likely raise inflation further across the region, and monetary policymakers are likely to respond with higher interest rates with the expected rate hikes by the US Federal Reserve starting March.

“They may not respond as soon as the Federal Reserve hikes the fed funds rate as expected in March, but it adds more certainty that central banks that have not yet begun to raise rates will likely do so by midyear. The most uncertainty remains in Indonesia, the Philippines and Thailand. Policymakers will be looking for continued economic recovery in these three economies, which are highly dependent upon international tourism and hospitality,” Moody’s Analytics said.