MANILA - The Philippine economy could grow by 6.5 percent in 2022 and is also likely to go back to its pre-pandemic level in the fourth quarter, Japanese financial services group Nomura said Friday.
The forecast is lower than the consensus of 6.8 percent and the government's 7 to 9 percent target range.
“Our forecast is 6.5 percent, but that is on the back of low base this year. The Philippines has been in and out of lockdowns. Our forecast implies the Philippines will only get back to pre-COVID levels by the fourth quarter of next year. That’s the last (ASEAN) country to get back to pre-COVID levels," Nomura Chief ASEAN Economist Euben Paracuelles said.
Weaker election spending and slower vaccination rate compared to its peers could also have an impact on the Philippines' economic recovery, he said.
The group also noted the still-elevated unemployment rate in the country which was at 7.4 percent in October.
"Therefore, I think scarring effects are relatively high in the Philippines," he said.
The economy expanded 7.1 percent in the third quarter despite the imposition of heightened mobility restrictions during the period.
Meanwhile, election uncertainties could keep foreign investors away, said Nomura’s APAC Equity Strategist Chetan Seth.
“Philippines is very small market, relatively illiquid than you have some uncertainty due to elections. That could keep some foreign investors away," he said.
But Nomura said the easing global supply chain challenges could help keep inflation in Asia in check. This means the Bangko Sentral ng Pilipinas could also keep interest rates in the Philippines unchanged at a record low of 2 percent for the duration of 2022 in support of the economic recovery.
The BSP earlier signaled it would keep the country's benchmark borrowing rate, used by banks to price loans, at 2 percent for the rest of 2021.