The Philippines’ economy will continue to recover strongly in 2022 as the easing of pandemic restrictions boosts local consumption and despite concerns about “geopolitical tensions”, the Manila-based Asian Development Bank said on Wednesday.

Growth is expected to reach 6% this year, one of the highest rates in Southeast Asia, and is expected to rise a further 6.3% next year, according to the bank’s report. Development prospects in Asiaits flagship business publication.

“Almost all indicators point to higher growth for the Philippines this year and in 2023, except for the impact of external factors related to geopolitical tensions that could dampen global growth, including in major export markets. countries, Europe and the United States,” said Kelly Bird, AfDB Country Director for the Philippines.

Despite the positive outlook, inflation is expected to rise to 4.2% in 2022 as tensions push oil prices higher, the AfDB said, referring to Russia’s invasion of Ukraine.

The Philippine economy grew 5.6% in 2021 after a COVID-induced recession caused it to tumble 9.6% the previous year.

The forecast comes just over a month after the Philippines’ economy reopened as part of the easing of pandemic restrictions, allowing tourists to revive the travel sector while ensuring that more Filipinos are vaccinated. against disease.

Metro Manila and areas of the main island of Luzon moved to the lowest level of COVID-19 restrictions in March. Some schools have reopened, while parks, zoos and malls have started operating again as daily infections have fallen below 1,000, Philippine officials said.

The AfDB said this would help overall projections because the capital region, home to around 14 million people, accounts for around 70% of total gross domestic product.

Opening borders would likely boost “tourism and employment in the service sector, which accounts for 60%” of the economy, according to the AfDB report.

“Policies aimed at building the resilience of micro, small and medium-sized enterprises, which play a vital role in the country’s economic recovery, must be strengthened to support the sector’s digital transformation, business innovation and skills development”, Bird said in a statement. .

The Philippines health department recorded 265 new cases of COVID-19 on Wednesday, bringing the total number since the start of the pandemic to more than 3.6 million. More than 66.2 million of the country’s 110 million people have been fully vaccinated, while another 71 million have received their first dose.

A customer walks past a billboard at a mall in Manila’s Makati financial district on March 31, 2022. [Jason Gutierrez/BenarNews]

Positive forecast

Meanwhile, developing economies in Asia are expected to grow 5.2 percent this year before surging to 5.3 percent in 2023 on strong domestic demand and export recovery, the AfDB said. Last year, growth was 6.9% as the region began to recover from COVID-19.

East Asia, South Asia and Southeast Asia are forecast to return to pre-pandemic growth rates.

However, the development bank said uncertainties, including fears of high interest rates, could have a negative effect on regional economies.

“The Russian invasion of Ukraine has severely disrupted development prospects in Asia, which is still struggling with COVID-19,” the AfDB said.

AfDB Chief Economist Albert Park said the war in Ukraine remains the biggest concern as it has already impacted economies in the region through higher oil prices.

“The economies of developing countries in Asia are starting to find their footing as they slowly emerge from the worst of the COVID-19 pandemic,” Park said.

“However, geopolitical uncertainty and new outbreaks of COVID-19 and virus variants could derail this momentum. Governments in the region will need to remain vigilant and ready to take action to counter these risks.

China, the world’s second largest economy, is expected to grow by 5% this year and 4.8% next year, weaker than its 8.1% expansion in 2021, while India is expected to grow by 7.5% this year and 8% in 2023.

In Southeast Asia, Vietnam is expected to see growth rates of 6.5%, the strongest performance, followed by the Philippines and Malaysia – both at 6%. Indonesia is expected to grow by 5% and Thailand by 3% this year.

In South Asia, the Maldives is expected to lead the growth rate at 11%, followed by India at 7.5% and Bangladesh at 6.9%.

While regional inflation remains manageable, the AfDB outlook indicates that it is likely to reach 3.7% this year before falling back to 3.1% in 2023.