The World Bank headquarters in Washington, D.C. XINHUA FILE PHOTO
The World Bank headquarters in Washington, D.C. XINHUA FILE PHOTO

THE Philippine economy is seen to grow at 6.3 percent this year despite the expected slowdown in East Asia and the Pacific, the World Bank said on Tuesday.

In a press briefing, Aaditya Mattoo, chief economist at World Bank East Asia and the Pacific, said the latest gross domestic product growth estimate for the Philippines is higher than the 5.7 percent announced in April.

Mattoo attributed the higher estimates to a "combination" of higher domestic demand, better export figures and return of tourism. He also cited the "revival of public and private investment."

"Even though some aspects of the Philippines' monetary policy have tightened, its fiscal policy seems to us to be a little bit more accommodative, and therefore we upgraded [our growth forecast]," said Mattoo.

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Mattoo also highlighted the "strong bounce back" in the Philippines' private consumption, which was also observed in most countries of the region.

2022 East Asia growth slashed

However, the World Bank said that the economic slowdown in China would cause a substantial decline in economic growth across East Asia and the Pacific in 2022.

The Washington-based lender predicted that growth in the East Asia and Pacific region, including China, would drop to 3.2 percent in 2022 from 5.0 percent in April and 7.2 percent in the prior year.

This year's economic growth in China, which accounts for 86 percent of the output in the 23-country area, was predicted to slow to 2.8 percent from the bank's earlier prediction of 5.0 percent. The Chinese economy grew by 8.1 percent in 2021.

The second-largest economy in the world is projected to increase by 4.5 percent in 2023.

Slowing global demand, rising debt and a reliance on temporary economic remedies to protect against increases in food and fuel prices, according to the World Bank, could undermine the economic performance across the area.

Export growth and a resurgence in domestic demand, made possible by the easing of Covid-19-related restrictions, have been the main drivers of growth throughout much of East Asia and the Pacific.

The aggressive interest rate increases being implemented by central banks around the world to tackle skyrocketing inflation pose another threat to the outlook for the area.

According to the World Bank, these have led to capital flight and currency depreciation.

The multilateral aid organization, meanwhile, warned authorities against using subsidies to impose price limits.

The World Bank said that doing so would primarily benefit the wealthy and divert funds away from infrastructure, health care and education.

"Controls and subsidies muddy price signals and hurt productivity," Mattoo said.

World Bank East Asia and Pacific Vice President Manuela Ferro, for his part, assured that economic recovery is underway in most countries of East Asia and the Pacific.

"As they prepare for slowing global growth, countries should address domestic policy distortions that are an impediment to longer-term development," added Ferro.