THE NATIONAL Economic and Development Authority (NEDA) is confident the Philippines could still reach its economic growth target this year, despite the impact of Russia’s invasion of Ukraine on prices.
“As of the end of year 2021, I believe we were a hundred billion short from reaching pre-pandemic level. So, I still believe, in the first quarter, we will exceed the 2019 level, and there have been significant developments in the domestic economy,” Socioeconomic Planning Secretary Karl Kendrick T. Chua said at a Tuesday briefing.
The shift to Alert Level 1, the least strict pandemic restrictions, in several areas has added over P9 billion to the economy per week, he added.
NEDA also expects a return to face-to-face schooling to add P12 billion to the economy each week.
However, there are concerns the ongoing geopolitical conflict in Eastern Europe may hurt the Philippine economy’s recovery. Consumption is expected to take a hit as prices of fuel and basic commodities continue to climb.
“Unfortunately, we are facing global headwinds to our economy. We believe we have a very strong domestic economy that can withstand that. We also believe the current global tension is temporary in nature,” Mr. Chua said.
Government economic managers said the Philippine economy will be “collateral damage” to the Russia-Ukraine war as oil and food prices increase. The conflict could also push up interest rates or the cost of borrowing, while investors are expected to be more conservative.
To assist public utility vehicle drivers and agricultural workers affected by oil price hikes, the government has released P3 billion in subsidies so far.
“We are ready to support the affected sectors. We also have to think about our strategies and calibrate our policies so that we achieve the highest gain for the people, not only certain groups,” Mr. Chua said.
“I think we are still very much on track to our projected growth targets for this year,” he added.
The government expects the economy to expand by 7% to 9% in 2022. The statistics agency is scheduled to release the first-quarter gross domestic product (GDP) data on May 12.
In 2021, the economy grew by 5.6%, reversing the 9.6% contraction a year earlier but remained below pre-pandemic expansion.
“We really don’t know how long this crisis or tension (in Ukraine) would last. Of course, we are hoping a few weeks or months,” Mr. Chua said.
Meanwhile, the peso is seen to be vulnerable to the effects of the Russia-Ukraine war as the net importing country faces twin budget and current account deficits, adding pressure on the central bank to hike rates, Oxford Economics said.
The peso weakened by 1.6% since the crisis began on Feb. 24, the think tank said. — J.P.Ibañez