Australia’s Macquarie Bank is optimistic Philippine economic growth for 2022 will be intact at 6.2% citing the reopening of the economy post-Covid-19 and post-election will likely see consumption return.
“The Philippines has been growing at an average of more than 6% prior to the pandemic and we expect this growth to be intact in 2022 but higher energy and food prices are impacting inflation. Meanwhile, a Marcos presidency will unlikely impact foreign investment noting that local businesses are more skeptical,” Wealth Management Director for Macquarie Bank Martin Lakos said during the Australia-Philippines Economic Outlook event organised by the Australia Philippine Business Council (APBC) on Thursday, 12 May in Brisbane, just days after a historic election in the Philippines.
“We forecast the BSP shedding its dovish stance in 2022, when the economy reopens in full and when Philippine currency and inflation concerns become more pressing. We thus expect policy rates to rise to 2.5% in the second quarter of 2022 and further see an upside risk to this forecast,” Lakos added.
Beyond the Philippines, the outlook is also looking good for Australia and the rest of the AsiaPacific region. However, there are risks associated with the threat of another round of Covid-19, higher interest rates and energy prices pushing inflation up, Australian federal elections, including geopolitical risks such as the ongoing Ukraine-Russia war.
Meanwhile, the better-than-expected GDP growth of 5.6% in 2021 shows the Philippines is on the path to economic recovery and on track to have a strong rebound in 2022. The Philippine the economy also expanded to 8.3% year-on-year in the first quarter of 2022 exceeding the pre-pandemic first-quarter level, according to Philippine Trade Representative to Australia Alma Argayoso, citing data from the Philippine Statistics Authority.
“There’s a lot going for investors looking for long-term opportunities in the Philippines post-pandemic and post-elections. We have a large domestic market of 110 million people with rising middle income and excellent trade options both within Asia and beyond,” Argayoso said.
“We have a wide network and superior Free Trade Agreements (FTAs) with our major trading partners including Australia and New Zealand through AANZFTA. This means that the Philippines is a natural choice for foreign companies looking at relocating or establishing their operations overseas that is accessible to key global markets such as the ASEAN, EU, and the US, as these countries have preferential tariff agreements with the Philippines,” Argayoso added.
Argayoso presented strategic opportunities in key industry sectors in the Philippines and highlighted the country’s strengths in delivering world-class IT-BPM services beyond voice, as well as its capability and capacity to meet diverse industry requirements of clients worldwide in electronics, automotive, aerospace, and copper mining industries.
Richard Croaker, founder and CEO of Profitmaster, a global outsourcing company offering Philippine-based remote accounting, administration, customer service, web development and digital marketing services shared his optimism about the country’s prospects and intends to bring several Australian companies to the Philippines to reap the benefits of an affordable, profitable, and high-quality work delivered from an overseas center.
“Profitmaster has been in Clark since 2014 and I can attest to the quality of the workforce in the area and the massive developments brought about by the government’s Build, Build, Build program. The number of hours going to Clark from Manila has been significantly cut and the new airport, roads, highways, and other infrastructures that have built over the years are creating new opportunities in the region,” Croaker said.
For APBC President Rene Cabrera who also heads San Miguel Yamamura Australasia Group, an established leader in packaging and contract beverage filling in Australia and New Zealand, the council is ready to support Australian companies looking for cross-border trade and investments between Australia and the Philippines.
“The history of APBC dates back to 1975 during the time of President Ferdinand Marcos, Sr., and Prime Minister Malcolm Fraser. Throughout these years, APBC has been the foremost private sector organisation dedicated to generating business opportunities, providing insights, contacts, and information exchange between the two countries,” Cabrera said.
“We are here to help, and our members and stakeholders can rest assured that we will be working constructively with whoever is sworn in as the new leader, either in the Philippines or Australia,” APBC Vice-President for Queensland Rafael Toda said.
Philippine Trade & Investment Centre Sydney