Asian Development Bank keeps BHL GDP forecast at 6.5%

The Asian Development Bank (ADB) has reIt lowered its growth forecast for the Philippines for this year, citing a strong rebound in domestic demand as the economy continues to reopen despite growth inFloridaation risk.

In its Asian Development Prospects (ADO) 2022 update report released on Wednesday, the multilateral bank said it expects the country’s gross domestic product to grow 6.5% this year, flat from its July forecast.

However, this is at the lower end of the government’s target of 6.5-7.5% for this year.

Philippine GDP expanded 7.4% in the second quarter, slowing from 8.2% in the previous quarter. bring this fiThe first term rate is 7.8%.

“The normalization of social and economic activity will lead the Philippine economy to a steady pace of expansion before the pandemic,” the agency quoted Kelly Bird, the country director of the Asian Development Bank in the Philippines, as saying in a statement.

“The recovery in tourism and private investment, along with continued public spending on massive infrastructure projects and remittances from overseas Filipinos, will boost the country’s economic recovery this year.”

At 6.5%, the Philippines is expected to be the fastest growing economy in Southeast Asia this year, along with Vietnam. This forecast is also higher than the ADB’s 5.1% growth forecast for the entire region, which was raised from 5% in July.

However, the Asian Development Bank now expects inflation in the Philippines to average 5.3% this year, up from its July forecast of 4.9%, due to “severe upward shocks to global energy and commodity prices” and “the negative impact of natural disasters on domestic agricultural supplies.” [that] It will likely lead to higher food prices until the end of the year.”

“Import-dependent economies have been hit hard simply because, across the region, import bills have ballooned, and even more so for smaller economies,” Dulce Zara, ADB’s chief regional cooperation officer for Southeast Asia, said in a webinar on Wednesday. .

“Rising prices, coupled with weak local currencies, is already thereFloridain their import bills.

The central bank expects headline inflation to reach 5.4% this year, well above its 2-4% target.

Address in languageFloridaation fell to 6.3% in August from a four-year high of 6.4% in July, bringing the eight-month average to 4.9%.

Ms. Zara also noted the risks posed by China’s slowdown, particularly as it is among the Philippines’ largest trading partners.

Meanwhile, the Asian Development Bank also kept the Philippines GDP growth forecast for 2023 at 6.3% “as monetary tightening and accelerating inflation dent domestic demand.” This is the second-fastest projected expansion in Southeast Asia for next year, after Vietnam’s 6.7%, which is below the official target of 6.5-8%.

Likewise maintained inFloridaThe company expected it to reach 4.3% for next year “because the return to steady economic growth will continueFloridaRelatively stable, energy prices are likely to slow.”

Abdul Abyad, director of the macroeconomic research department at the Asian Development Bank, said that the central bank’s policy rates are expected to continue rising to counterFloridaation and support for weak currencies due to dollar strength amid US Federal Reserve tightening cycle.

“The peso has depreciated by about 13% so far… [but] The Philippines is not in the extreme. It’s pretty close to the average in the area, White said. “A lot of the depreciation of the Philippine peso does not reflect a lot of weakness in the peso, but the strength in the dollar, driven by the tightening of the Fed.”

Bangko Sentral ng Pilipinas (BSP) has raised borrowing costs by a cumulative 175 basis points since May rates to curb rising inflation.

On Wednesday, the peso closed at a new low of P58 per dollar, down 52 centavos from the day before, as markets awaited the Federal Reserve’s decision overnight.

Year-to-date, it has lost 13.73% of its value against the dollar, making it one of the worst performing stocks in the region.

Apart fromFloridaThe Asian Development Bank, which is mostly attributed to the Russia-Ukraine conflict, said other risks to growth included a sharp slowdown in major advanced economies and escalating geopolitical tensions.

asia development
Meanwhile, the Asian Development Bank lowered its growth forecast for developing Asia this year and 2023, amid tighter global monetary policy.FloridaInformation and communications technology, and lockdowns in China due to the coronavirus disease 2019 (COVID-19).

The Asian Development Bank cut its 2022 growth forecast for developing Asia to 4.3%, slower than the 4.6% forecast in July.

In 2023, developing Asia is expected to expand by 4.9%, down from the previous forecast of 5.2%.

Domestic consumer spending and investment are driving growth as economies in the region continue to ease restrictions imposed by the outbreak, thanks in part to vaccination campaigns and a decline in the COVID-19 death rate. However, the ongoing invasion of Ukraine has increased global uncertainty, exacerbated supply disruptions, and destabilized energy and food markets,” the ADB said.

“More severe monetary tightening by the US Federal Reserve and the European Central Bank is weakening global demand and causing turmoil in financial markets. Meanwhile, intermittent COVID-19 outbreaks and new lockdowns have slowed growth in [China]The largest economy in the region.

Excluding China, which is also facing challenges due to a weak real estate sector, the rest of developing Asia is expected to grow by 5.3% in both 2022 and 2023.

This will be the first time in more than three decades that China is growing more slowly than the rest of developing Asia. In other words, it will be a drag on growth rather than a driver of growth in the region,” Mr. White said in an episode of ADB Insight released on Wednesday.

Asian Development Bank chief economist Albert Park said that while the region has seen some recovery, risks remain “on the horizon,” including a slowdown in global growth that could affect exports, as well as a strong monetary tightening that could lead to fiFinancial instability. – Diego Gabriel C Robles

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