MUFG sees PHL economy growing by 6.5% this year

By Luz Wendy T. Noble, Reporter

THE PHILIPPINE ECONOMY is likely to grow faster than expected this year, although China’s slowdown could be a downside risk to the country’s economic expansion, MUFG Bank said.

In a note released on Monday, MUFG said it now expects Philippine gross domestic product (GDP) to expand by 6.5% this year, from its previous forecast of 6%.

This is still below the 7-9% target set by economic managers.

MUFG Bank analyst Sophia Ng said they would be reviewing their growth outlook for the Philippines in view of the economic slowdown in China due to its zero-COVID policy and strict lockdowns.

This could have a direct impact on the Philippines because China is the country’s biggest trading partner.

“A reduction in demand from China will have a negative impact on the Philippines’ overall export growth, and the supply crunch will also raise import prices of goods in general, resulting in wider trade deficits in the coming months,” Ms. Ng said in an e-mail.

For the first quarter, MUFG said Philippine economic output likely expanded by 6.8%.

If realized, this would be slower than the 7.8% growth in the October to December period, but would still mark the fourth consecutive quarter of growth for the economy.

It also compares with a BusinessWorld poll of 17 analysts that yielded a median estimate of 6.7% GDP growth for the first three months.

First-quarter GDP data will be released on May 12.

Ms. Ng said their first-quarter GDP estimate took into account the slower rise in consumption as mobility restrictions were tightened during the Omicron surge in January.

Metro Manila and some provinces were placed under Alert Level 3 to contain rising infections.

Restrictions were eased to Alert Level 2 by February, and to the most relaxed Alert Level 1 by March.

Ms. Ng said another factor that likely eased growth in January to March was the large drop in net exports due to a bigger trade deficit.

The trade gap widened to $13.892 billion in the first quarter from the $8.345-billion deficit a year earlier, the Philippine Statistics Authority reported on Friday.

The Philippine economy grew by 5.7% in 2021, after a record 9.6% contraction in 2020.