THE Philippine economy is projected to grow above 6 percent as the regional and global economies continue to recover, according to the United Nations Economic and Social Commission for Asia and the Pacific (Unescap).
Based on the Economic and Social Survey of Asia and the Pacific for 2022, the Philippines is projected to post a growth of 6.3 percent this year and 6.7 percent next year.
Unescap also projects inflation in the country to average 3.3 percent this year and 3 percent next year. It can be noted that inflation averaged 3.4 percent in the first quarter of 2022.
“Continued recovery will be seen in 2022, with a weaker-than-expected first quarter due to the
Omicron variant triggering a brief round of restrictions,” the report said. “With many of the restrictions expected to be lifted, private consumption will strengthen.”
The report stated that inflation in Southeast Asia has been largely influenced by global food and oil prices. However, domestic developments such as Typhoon Rai and African Swine Fever increased inflation in the Philippines.
“Inflationary pressures have been influenced by high global food and oil prices,” the report stated. “As inflation is more muted in Southeast Asia and core inflation remains modest, central banks within the subregion will keep rates low to support recovery.”
Unescap said economic growth in developing countries in Asia and the Pacific is projected to moderate to 4.5 percent in 2022 and 5 percent in 2023, compared with an estimated growth rate of 7.1 percent in 2021.
The UN agency said the cumulative output loss due to Covid-19 for the region’s developing economies between 2020 and 2022 is estimated to be nearly $2 trillion. The National Economic and Development Authority (Neda) earlier estimated the pandemic shaved P3 trillion from the country’s GDP. (Story here: https://businessmirror.com.ph/2022/04/12/pandemic-shaved-p3-trillion-from-economy-neda/).
However, the report showed that regional economies face several downside risks related to supply constraints, rising inflationary pressures, prospects of increases in interest rates, shrinking fiscal space, and the emerging global economic fallout from the ongoing Russia-Ukraine conflict.
“As developing countries in the region move ahead with learning to live with Covid-19, balancing the protection of public health and livelihoods, it is time to lay the foundations for a fairer future of equal opportunities and inclusive outcomes,” United Nations Undersecretary-General and Executive Secretary of Escap Armida Salsiah Alisjahbana said, however.
Escap recommends a three-pronged policy agenda aimed at shaping an inclusive economy in Asia and the Pacific. First, instead of reductions, developing countries in the region must tilt public spending towards basic universal health coverage, push further towards universal primary and secondary education, and expand social protection coverage.
“Smart” fiscal policies can improve the overall efficiency and impact of public spending and revenue collection. Concurrently, new sources of revenue should be explored, such as taxing the digital economy, along with shifting the tax burden towards those better off.
Second, the 2022 Survey argues that central banks in the region can and should tilt their traditional monetary policy conduct towards promoting inclusive development. While focused on keeping inflation low and stable, central banks can invest part of official reserves in social bonds, explore how a central bank digital currency can enhance financial access, and encourage more innovative financial instruments for social purposes.
Third, governments can also proactively guide, shape and manage the structural economic transformation process, which is increasingly driven by the digital-robotics-AI revolution, for more inclusive outcomes. This includes supporting the development of labor-intensive technologies, inclusive access to good-quality education, reskilling, strengthening labor negotiation capacities and social protection floors.