The United Nations (UN) downgraded its growth forecast for the Philippine economy this year as the global recovery continues to struggle with new Covid-19 infections, supply chain challenges, and rising inflation.
In its World Economic Situation and Prospects (WESP) 2022, the UN said the Philippine economy will post a growth of only 5.5 percent this year before posting a growth of 7.7 percent next year.
For 2021, the official data of which will be released later this month, the UN projects GDP growth to average 4.9 percent. UN GDP estimates for last year and this year were both downgraded from 6.2 percent and 6 percent, respectively.
“Without a coordinated and sustained global approach to contain Covid-19 that includes universal access to vaccines, the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy,” Liu Zhenmin, undersecretary-general of the United Nations Department of Economic and Social Affairs, said.
In terms of inflation, the UN estimates that the rise in commodity prices this year will average 3.9 percent and 3.4 percent next year. The forecast for inflation in 2022 was initially pegged at 2.8 percent in the WESP 2021.
The UN said inflation in some countries have posted above-target inflation such as the Republic of Korea which saw higher prices of petroleum, housing rentals and services.
The report also cited the Philippines as experiencing “a spike in food inflation caused by adverse weather conditions” in 2021. Average inflation in 2021, according to the Philippine Statistics Authority (PSA) was at 4.5 percent, which is above the initial target set by the central bank.
“A combination of supply-chain bottlenecks, energy price increases and the release of pent-up demand, however, has pushed inflationary pressures in many parts of the world, presenting an additional challenge,” the report stated.
The UN said the average GDP growth in East Asia is estimated at 6.7 percent in 2021 as well as projected at 4.9 percent in 2022 and 5.4 percent in 2023.
Among the Asean-5 countries, Vietnam is projected to post the fastest growth at 6.8 percent followed by Malaysia at 5.6 percent and the Philippines and Cambodia at a growth of 5.5 percent. Singapore will post the slowest growth of 3.8 percent this year.
For 2023, the UN projects the Philippines to post the fastest growth in the Asean-5 at 7.7 percent. This will be followed by Cambodia at 6.2 percent and Indonesia at 6 percent.
“East and South Asian economies are also vulnerable to the uncertainties and risks imposed by the pandemic, especially those countries with low vaccination rates,” the UN said, however.
“In addition, accelerated global monetary tightening could increase volatility, trigger capital outflows and disrupt credit growth, especially in countries with elevated debt and large financing needs,” UN added.
The report also stated that in East Asia, a possible sharper-than-expected slowdown in China and the unresolved trade tensions between China and the United States could also constrain economic recovery.
After expanding by 5.5 percent in 2021, the global output is projected to grow by only 4 percent in 2022 and 3.5 percent in 2023.