Philippines seen to grow fastest in ASEAN next year

by Lawrence Agcaoili – The Philippine Star, 26 Nov 2021

MANILA, Philippines — The Philippines is on its way to becoming the fastest growing economy in Southeast Asia next year as it continues to gradually recover from the pandemic-induced recession, Malaysian financial giant Maybank said.

Chua Hak Bin, regional co-head of macro research at Maybank, Kim Eng said during the bank’s virtual Year-end Market Forum and Anniversary Celebration that the Philippines would likely book a gross domestic product (GDP) growth of seven percent in 2022.

This would be the fastest among member countries of the Association of Southeast Asian Nations (ASEAN), with Vietnam seen to be the second fastest at 6.7 percent, Malaysia at six percent, Indonesia at 5.4 percent, Thailand at four percent and Singapore at 3.5 percent. The entire region is expected to grow 5.3 percent next year.

For this year, Chua said the Philippines is seen with a GDP growth of 5.5 percent, slower than Singapore’s 6.8 percent but faster than Indonesia’s 3.9 percent, Malaysia’s 3.8 percent, Thailand’s 1.6 percent and Vietnam’s one percent.

Chua said Maybank sees global GDP growth moderating to 4.5 percent for 2022 from six percent in 2021, while the expansion in ASEAN would accelerate to 5.3 percent from 3.8 percent.

Due to the impact of the pandemic, the global economy slipped into recession with a GDP contraction of 3.2 percent last year, while ASEAN’s economy shrank four percent.

“ASEAN’s GDP growth will likely be faster than China in 2022, the first time since 1990, due to cyclical drivers such as economic reopening with rising vaccination rates, and in subsequent years due to structural drivers such as demographics, leverage and shifting manufacturing supply chains,” Chua said.

The GDP growth projection of Maybank for the Philippines is also faster than the four to five percent target set by the Development Budget Coordination Committee (DBCC) for this year and well within the seven to nine percent target for next year.

The country’s GDP growth averaged 4.9 percent from January to September after exiting from recession with a back-to-back GDP expansion of 12 percent in the second quarter and 7.1 percent in the third quarter.

Chua said the Philippines should leverage on its demographic dividends as the year of working age population is seen peaking at 2050, while many parts of Asia are aging.

The economist noted that the pace of COVID-19 vaccination in the Philippines is lagging compared to that of other countries such as Thailand and Vietnam where the rollout of vaccines is accelerating.

“The Philippines is expected to reach its 70 percent vaccination rate by May 2022,” Chua said.