Moody's Analytics sees faster but still below-target 2022 PH growth of 6.4%

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Metro Manila (CNN Philippines, March 28) – The Philippine economy is expected to perform stronger this year than previously estimated, Moody's Analytics said in a report released Monday, but the growth may still not meet the government's target.

The American think tank updated its projection from 6.2% to 6.4% growth for the country in 2022. Still, this is below the 7-9% range estimated by economic managers – goalposts they have kept even with recent geopolitical tensions pushing commodity prices up.

Moody’s Analytics associate economist Sonia Zhu told CNN Philippines in an email that the latest forecast “partly” reflects the strong expansion seen during the last three months of 2021. Output grew by 7.7% last quarter, zooming past analysts’ expectations.

It also shows the “strong and sustained” rebound seen for the Philippines this year, said Zhu.

“The authorities have eased all mobility restrictions, reopened borders to all vaccinated international travelers quarantine free. Further, the current budget provides additional fiscal policy support for the economy,” she added.

However, Zhu cautioned that inflation is a crucial risk factor to the country’s economic recovery, mainly citing rising energy prices amid the Ukraine-Russia conflict.

“The Philippines is among the countries in APAC most dependent on refined petroleum for energy generation and production. Elevated prices will spill over to producer and consumer prices in the Philippines,” she added.

In a separate weekly monitor published Monday, Moody’s Analytics also hiked its inflation forecast for the country this year from 4.1% to 4.2% - breaching the 2-4% target band of the Bangko Sentral ng Pilipinas.

During its policy meeting last week, the BSP raised its inflation projection for 2022 to 4.2% from the prior 3.7% amid higher projections for average Dubai crude prices.

Moody’s Analytics also maintained that the central bank could normalize monetary policy by the third quarter, but could “act promptly” to address inflation pressures if price increases become “broad-based.”