February 14, 2022 | 00:00
MANILA, Philippines — Japanese investment bank Nomura raised its gross domestic product (GDP) growth forecast for the Philippines to 6.8% from a previous target of 6.5% as COVID cases begin to subside.
In a report, Euben Paracuelles, chief ASEAN economist at Nomura, said the upward revision reflected faster-than-expected expansion in the third and fourth quarters of last year.
“We have slightly raised our GDP growth forecast for 2022, mainly reflecting stronger-than-expected growth over the last two quarters,” Paracuelles said.
The Philippines emerged from the pandemic-induced recession that spanned five quarters with sustained GDP growth of 12% in the second quarter of last year, 6.9% in the third and 7.7% in the fourth trimester.
As a result, the economy grew by 5.6% for the whole of 2021, slightly beating the government’s 5-5.5% target and reversing the 9.6% contraction recorded in 2020.
Despite the upward revision, Nomura’s new GDP growth target is still below the target set by the Cabinet-level Development Budget Coordinating Committee (DBCC) for this year.
“However, this remains below the government’s seven to nine percent range, reflecting our view that still-low vaccination rates and the risk of a further acceleration in new COVID cases could hamper further reopening, which, along with limited fiscal support, could weigh on growth,” Paracuelles said.
COVID infections soared to almost a daily record of 40,000 cases in January after the Christmas and New Year holidays with the emergence of the more contagious variant of Omicron, prompting the government to impose a level of alert 3 stricter in the National Capital Region (NCR) and neighboring provinces.
The daily tally then fell to less than 5,000 cases, paving the way for the restriction to be lowered to Alert Level 2.
With the campaign for national elections underway, Nomura sees the risk of higher infections despite the receding Omicron wave, similar to the experience of neighboring countries like Thailand after increased mobility.
“The Omicron wave has subsided, but with the ongoing election campaign, new COVID cases could re-accelerate amid still-low vaccination rates, preventing further reopening,” Paracuelles said.
About 54.6% of the population is fully vaccinated at the beginning of February, including 7.3% receiving boosters.
Nomura also raised its current account deficit forecast as oil prices are now expected to hit $88.4 a barrel and amid another record trade deficit in December.