The country’s gross domestic product may to see a 6.9 percent growth in fiscal year 2021-22 amid higher prices for oil and imports, and the loss of export sales beyond those built in the present forecasts, says the Asian Development Bank (ADB).
The risks to the growth surfaced mainly due to the Russian invasion of Ukraine, reports bdnews citing the bank.
The growth forecast reflects a rebound in external trade and recovery in domestic economic activities fueled by the implementation of stimulus packages and increased remittance, the Manila-based bank said in the Asian Development Outlook 2022 (ADO 2022) released on Wednesday.
Inflation is expected to increase to 6 percent in FY2022 from 5.6 percent in 2021 as price pressures are increasing from global food and fuel prices along with the implementation of stimulus measures, according to the report.
The current account deficit is also likely to widen from 0.9 percent of the GDP in FY21 to 2.7 percent in FY22 on the back of an increase in imports and decline in remittance growth.
“The ongoing socio-economic recovery needs to be accelerated by enhancing domestic resource mobilisation, incentivising the private sector to create products and services, promoting modern green technologies, and fostering knowledge and innovation,” said Country Director Edimon Ginting.
“Building climate resilient infrastructure and services, introducing carbon tax on fossil fuels, and promoting green investments will help to further advance the current policy initiatives for managing climate change for inclusive and sustainable green growth,” Ginting added.
The ADP 2022 says that private investment will get stronger, reflecting solid growth in private sector credit and imports of industrial raw materials and capital goods. With large available funding, public investment will increase to support the implementation of priority large infrastructure projects. Growth in private consumption, however, may be affected by a decline in remittances.
The report also highlights the importance of managing climate change to ensure inclusive and environmentally sustainable growth. As part of developing a national adaptation plan by the government, the ADB called for a climate risk-informed master plan to be drawn up for each sector and development unit.
Capacity for better accessing and utilising climate risk analysis needs to be mainstreamed in public financial management decisions across government, it said. Enabling policies are necessary for green investments, the development and adoption of green technologies, and for the greening of existing industries.
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