Metro Manila (CNN Philippines, December 22) — The Philippines’ economic growth could decelerate next year with risks brought about by the national elections, Pantheon Macroeconomics warned.
Of the five countries included in its Emerging Asia economic outlook for 2022, only the Philippines is expected to see a slower output expansion, according to the United Kingdom-based think tank. From 5.5% this 2021, it pegs a 4.5% full-year growth for the country next year.
Investors are likewise expected to stay on the sidelines as they await the victors of the 2022 polls, he added.
“Elections in the Philippines are rarely fought on economic policy,” stated Pantheon Macroeconomics senior Asia economist Michael Chanco. “But they still carry significant event risk, particularly if Ferdinand Marcos Jr., the current frontrunner and the son of an ex-dictator, wins. His father was toppled by the last major revolution, in 1986.”
The economist likewise warns public expenditure “hits a brick wall” during elections — reflective of a government spending ban in place prior to the polls. This shaves “40% off quarterly trend growth, on average, in the same quarter of the last three elections,” he said.
Chanco likewise flagged that fiscal policy could “impose a persistent drag beyond the ballot.”
He added the Philippines is the “only one left in the region which has yet to engineer a nominal consolidation of its Covid-era budget blowout,” referring to measures aiming to trim public deficits and accumulation of debt.
Private consumption is expected to remain lukewarm in 2022, according to Chanco, stressing households will continue rebuilding the huge amount of savings lost since the pandemic’s onset. These efforts were set back by the Delta coronavirus variant, he added.
With the economy seen to grow at a milder pace next year, Chanco projects the Bangko Sentral ng Pilipinas (BSP) will be kept at bay with its monetary policy support.
Pantheon Macroeconomics projects the BSP to keep rates steady at their record 2% low even until 2023, in line with its prior expectation that the central bank will keep its accommodative policy stance until the economic recovery becomes more stable.
Economic managers expect growth to settle within 7-9% in 2022.
