‘Philippines to lead ASEAN in growth this year’

MANILA, Philippines — The Philippines is expected to post the strongest economic growth in Southeast Asia this year as domestic demand continues to recover even amid rising inflationary pressures.

GlobalData, a leading data and analytics company in the UK, said gross domestic product (GDP) in the country would likely grow seven percent this year from the 5.7 percent in 2021.

While the GDP expectation settled at the lower end of the government’s revised seven to eight percent target, this is still the highest growth expected in Southeast Asia.

Apart from the Philippines, robust growth is also seen in Malaysia at 6.7 percent, Vietnam at 6.6 percent, Brunei at 5.9 percent and Indonesia at 5.3 percent. Myanmar is expected to record the lowest GDP at 1.6 percent.

GlobalData said recovering domestic demand and trade partnerships will drive growth in the region. ASEAN GDP growth is forecast to rebound at 5.2 percent from last year’s weak performance of just 2.9 percent.

“Regardless of the limited growth prospects and rising inflationary pressure globally, the spotlight is on ASEAN nations,” GlobalData economic research analyst Animesh Pareek said.

“Regional trading blocs such as the Regional Comprehensive Economic Partnership, coordinated efforts to curtail the pandemic and robust recovery in domestic demand are expected to drive inclusive growth and development in the region,” Pareek said.

In the Philippines, Pareek noted that growth would be driven by high manufacturing growth this year.

On the downside, however, GlobalData warned of mounting risks due to elevated inflation across the region.

GlobalData jacked up its inflation forecast in the region to five percent from three percent earlier due to supply chain disruption, rising fuel and food prices and tightening of money supply in major economies.

The Philippines is also expected to post one of the highest inflation rates for this year at 4.7 percent. Nonetheless, this is slightly below the five percent revised assumption of the central bank.

Five-month average inflation is at 4.1 percent after the headline rate surged 5.4 percent in May.

In the region, inflation is seen highest in Myanmar at almost 15 percent. Other economies with elevated rates include Laos, Singapore, and Thailand.

Pareek said governments in the region need to keep the rising prices under check by replacing the costly fuel subsidy with a well-targeted cash transfer program.

“Policymakers have moderate-to-ample fiscal space with manageable debt-to-GDP ratio but there is limited space for accommodative monetary policy wherein the public-private partnership can be embraced,” Pareek said.

“Nations need to avoid premature withdrawal of policies augmenting the growth and reallocate capital and labor to new and budding sectors,” he said.