MANILA - The Philippines is expected to grow 6 percent this year, which is lower than the government’s target of 7 to 9 percent, but still above the global average, Fitch Solutions said on Wednesday.
Fitch Solutions said the Philippines would be the third best performer in Asia for the year, behind only India and Vietnam. The world economy meanwhile is expected to grow 3.6 percent this year down from an earlier forecast of 4.1 percent, Fitch said.
Asia however is different, including the Philippines, Fitch said.
"Asia was actually a region that was held back in terms of growth last year in large part because many of the economies rely heavily on tourism, and also because Asian economies had much more stringent policies when it came to COVID-19. That meant economic activity was slow to recover last year,” said Cedric Chehab, Head of Global Country Risk at Fitch Solutions says
Chehab said Malaysia, the Philippines and Vietnam are going to see growth accelerate.
Meanwhile, two key factors contributing to slower global growth are inflation and monetary policy. Fitch Solutions noted that the sanctions imposed on Russia related to the Ukraine conflict had a huge impact on global commodity prices, pushing inflation higher.
Global inflation has yet to peak, and is forecast to accelerate all the way up to May.
Fitch said it expects faster inflation to push many central banks around the world into even more monetary policy tightening.
Some central banks have already been aggressively raising interest rates, including the US Federal Reserve, Fitch noted.
The Bangko Sentral ng Pilipinas meanwhile has already voiced its commitment to supporting the Philippine economic recovery from the COVID-19 pandemic with record low interest rates for as long as possible.
BSP Governor Benjamin Diokno however has also mentioned that they will reconsider monetary policy settings if data on inflation, money supply, and economic growth shift.