BDO OFFICIAL FORECASTS SLOWER GDP UPTICK

AN analyst from BDO Unibank Inc. does not see Philippine economic growth hitting the government’s target this year, warning that the threat from Covid-19 remains.

During the CCI France Philippines 2022 Annual General Meeting on Friday, Jonathan Ravelas, BDO chief market strategist and first vice president, said the country’s gross domestic product is expected to expand by 6.2 percent this year.

His forecast is weaker than the 7- to 9-percent growth target set by the Development Budget Coordination Committee for this year, but faster than the 5.7-percent actual economic expansion in 2021.

Following the faster-than-expected 8.3-percent increase in the first three months of the year, Ravelas estimated that the second-quarter print would be close to 7 percent due to the tail end of election spending.

“But, of course, we still have the pandemic, sad to say the numbers — and I say sad because there are now cases that are rising. Hopefully, we’re still able to keep our low numbers relative to the region’s. So, hopefully, we won’t go to another lockdown. But again, it’s a great reminder that it’s still here,” he added.

Besides the pandemic, the BDO analyst expressed concern over the rising inflation rate, which he anticipates to remain around 5 percent until the end of the year.

Consumer prices, he said, necessitates policy changes in the government, which he hopes the incoming administration will make.

“But again, the outlook doesn’t forebode well, so this could be a repeat of 2018. So, 2018 at the high was 6.7 percent. If you’re able to read my chart, it has 7.4 [percent] till end of the year — that’s assuming that the war in Ukraine would have ended in June,” Ravelas explained.

He believes that the Philippines’ next step is to address the “SHE” problem, which stands for social, health care and economic issues.

The analyst also said the incoming president needs people that he can trust in his administration, similar to what was seen in the last two presidents’ economic teams.

“They were helped steered by somebody who stayed from beginning to end, Secretary [Cesar] Purisima and eventually Secretary Carlos Dominguez [3rd]. So, this is something that is quite important and this is something what they were waiting for,” he stressed.

Lastly, Ravelas hopes for a smooth transition of power in the government this year, as well as the government applying what it has learned in the last two-and-a-half years in terms of pandemic management, infrastructure spending getting off the ground by the fourth quarter and inflation rates titling down toward the fourth quarter.