Next leader can build on growth momentum

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The global economy faces a grim outlook amid fresh threats from Covid-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies, according to the World Bank’s latest Global Economic Prospects report. It said global growth will decelerate to 4.1percent this year from 5.5 percent in 2021.

The WB said the fast-spreading Omicron variant will likely continue to disrupt economic activity in the near term. In addition, a notable deceleration in major economies—including the United States and China—will weigh on external demand in developing economies.

“The world economy is simultaneously facing Covid-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries,” said World Bank Group President David Malpass. “Putting more countries on a favorable growth path requires concerted international action and a comprehensive set of national policy responses.”

In the same report, the World Bank said the Philippines is poised to register the fastest growth in the Asean this year and the second- highest growth in 2023. The country’s projected economic growth rate of 5.9 percent this year is the fastest growth expected in the Asean, while the 5.7 percent expected next year will be second only to Vietnam’s 6.5 percent. (Read, “PHL will post fastest growth in Asean—WB,” in the  BusinessMirror, January 12, 2022).

A local think tank also painted a rosy economic picture for the country this year. The Philippine economy is poised to recover this year despite the Omicron variant and the uncertainties brought about by the change in administration, according to the First Metro Investment Corp.-University of Asia and the Pacific (UA&P) Capital Markets Research (Read, “Think tank still sees PHL recovery in 2022 amid Omicron, polls,” in the BusinessMirror, January 11, 2022).

UA&P economist Victor A. Abola said GDP growth this year is expected to reach 6 to 7 percent. Full-year GDP growth in 2021, which will be officially released toward the end of the month, is expected to average 5.1 percent. The Philippines is also seen retaining its credit rating, as the government still has some fiscal and monetary space; and inflation is expected to slow with oil seen hitting $60 per barrel toward the end of 2022.

“The elections would be the bigger risk [for the economy compared to rising Covid-19 cases]. I mentioned that the elections have to be credible, more than anything. It doesn’t matter who is elected. It’s more whether the votes are counted properly and that’s being addressed by a number of civic groups so we can only hope that it really happens that way, that elections would be properly conducted,” Abola said, adding that the polls could slow GDP growth in the second semester, but “this is normal during presidential election years.”

With nationwide vaccinations still going on, and the current surge in cases brought about by the Omicron variant seen dissipating soon, there’s a good chance the country can sustain its economic growth in the aftermath of the pandemic. The next administration would do well to build on this growth momentum by choosing a good team of economic managers to make the Philippines a prosperous country free of poverty.