BSP says 7% GDP growth likely in 2022

Outgoing Bangko Sentral ng Pilipinas Governor Benjamin Diokno the Philippines’ gross domestic product can grow 7 percent this year despite the uncertainties hounding the global economy, according to a report by ABS-CBN.

Diokno, who will head the Department of Finance, said that the global economy is again at risk. As the COVID-19 pandemic was beginning to recede, Russia invaded Ukraine causing prices of many commodities to rise and disrupting trade, he said.

"The supply bottlenecks nurtured by the COVID-19 are still evident in many facets. This is further complicated by geopolitical issues that are greatly affecting commodity prices," Diokno said.

He mentioned that oil prices are still above 2021 levels, while prices of wheat, corn and nickel have risen by at least 30 percent as of May this year.

"Renewed market pressure is being driven by the high inflation, rising interest rates, and sharp increases in the prices of commodities. Financial stability risks have been elevated with macrofinancial prospects subject to heightened volatilities and broader uncertainties."

Despite these challenges, Diokno said the Philippines can still hit its growth target.

"Maganda ang ekonomiya natin. The economy grew by 8.3 percent [ in the first quarter]. There are 3 million more jobs now than before kumpara mo noon sa krisis March 2020 (compared to when the crisis started in March 2020)," said Diokno.

Last month, government economic managers narrowed the country’s GDP growth target to between 7 percent to 8 percent, from an earlier forecast of 7 to 9 percent. The crisis in Ukraine, as well as rising interest rates globally, would affect the country's growth, they said. 

The BSP’s Monetary Board is set to decide on monetary policy on Thursday. Several analysts are expecting the central bank to announce a 50 basis point hike in its benchmark rate. They said this was needed to fight inflation, which has already surged to 5.4 percent in May, as well as to defend the peso from further depreciation.