Election season, continued recovery to boost economic growth in 2022

COMING from a roller coaster ride in 2021 due to a second wave of Delta-fueled Covid-19 infections and catastrophic Typhoon Odette at the end of December, Cebu business leaders are hopeful still a better 2022 despite the risks on the horizon. “

Steven Yu, president of the Mandaue Chamber of Commerce and Industry, said the business community expects the six to eight percent growth this year to be fueled by increased consumer spending in the country. during the May 2022 election season.

“We look to the year 2022 with a lot of hope and some uncertainty,” Yu said.

The Asian Development Bank has raised its gross domestic product (GDP) projections for 2022 to 6%, down from 5.5% previously.

AfDB Country Director Kelly Bird said the Philippine economy has shown “impressive resilience”.

He said that “public spending on infrastructure and continuing to immunize the population will help the country accelerate recovery in 2022”.

At the recent Development Budget Coordination Committee (DBCC) meeting, the country’s economic officials expressed optimism that the country’s GDP “will return to its pre-pandemic level by 2022”.

He kept the GDP targets at seven to nine percent for 2022 and six to seven percent for 2023 and 2024.

The DBCC also said inflation will hit two to four percent from 2022 to 2024.

The assumption for Dubai crude oil price per barrel, on the other hand, has been revised up to $ 60 to $ 80 per barrel from 2022 to 2024, mainly due to the optimistic outlook for oil demand then. that the world economy gradually rebounds in the medium term. .

May elections

Rey Calooy, president of the Filipino-Cebuano Business Club Inc. (FCBI), said the upcoming election fever will make businesses vibrant in 2022.

Election related businesses such as printing and advertising among others will surely thrive during the season.

The FCBI, which represents micro, small and medium-sized enterprises (MSMEs), has also based its hope for this year on the intensification of the vaccination campaign to counter the threats of Covid-19. The group expects that as the country moves closer to collective immunity, it would lead to a faster economic recovery.

Calooy also attributed the group’s optimism this year to the new set of leaders who will be elected in May.

“We will have a new elected president who will bring more hope to the business world,” he said.

According to reports, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the GDP “bump” in spending for the May 2022 national elections is estimated at 0.50%.

The previous elections contributed 1% to the total GDP.

Diokno expects this year’s elections to not be as costly as previous ones due to efforts to contain the pandemic.

But economists expect government spending, especially on infrastructure, to increase before the election spending ban.

Year that was

Cebu’s economy was on track for a somewhat rapid recovery in 2021 until Delta-fueled second wave and catastrophic Typhoon Odette clouded the province’s economic recovery.

“Our recovery from the coronavirus in terms of mobility will continue; however, the recovery from the economic losses (caused by Typhoon Odette) is certainly delayed and much more delayed, ”Yu said.

Compared to 2020, the year 2021, according to Yu, has been more difficult economically.

“This is a year of declining purchasing power, decreasing the speed of money, and quite unexpectedly high inflation, especially in the United States,” he said.

Yu also noted a shortage of some items like semiconductors, which has impacted the supply of cars and electronics, and surprisingly enough, cargo containers are also in short supply.

“Costs were increasing for businesses and the market slowed down further due to the lower financial capacity of consumers,” he said.

Calooy, on the other hand, said MSMEs’ physical activities are being outclassed by e-commerce sites or online marketplaces.

But as competition in the retail trade has become more intense, Yu said traditional brick-and-mortar businesses have adapted to the new or altered normal to stay in business. The activities of consumers and businesses had adapted better to the pandemic.

2021 was also a year when Covid-19 vaccines were rolled out and new cases of Covid-19 have declined significantly.

“Overall, the community has accepted the impact of the pandemic. They are moving forward with caution and hope, despite a still unfavorable business climate in most sectors. They are happy to be alive, and for many, they are still about to start picking up the pieces of their damaged livelihood, ”Yu said.

Opportunities

In 2022, business leaders continue to see many opportunities.

Besides the election-induced increase in consumer spending, Yu said that more foreign direct investment and election-related inflow of funds will enter the country. The return of international air travel, more mobility and lower inflation are also expected this year.

Alfred Reyes, president of the Cebu Hotels, Resorts and Restaurants Association, said the hospitality industry will see big actions from 2023 and beyond.

“The busy 2022 activities will not return until the trip is complete,” he said. But he noted that this year’s performance will determine the fate of the industry going forward.

However, it is feared that the wrath of Typhoon Odette could derail the “full recovery” of the sector as billions of tourist properties have been bulldozed whose rehabilitation could take some time.

Retailer Robert Go, on the other hand, said industry players are hopeful that retail sales experience unhindered growth in this brand new year thanks to a yo-yo performance in 2021.

“Our outlook is optimistic but cautious as Covid-19 Omicron and other variants could wreak havoc. We expect that slow investment will only be reflected with the help of election spending, ”said Go, spokesperson for the Philippine Retail Association-Cebu.

Meanwhile, urban agriculture, e-commerce, collaborative workspaces, cloud cooking, hybrid events, and agriculture, among others, will dominate businesses this year, according to Calooy.

However, they also warned of risks that could negatively impact the optimistic outlook for the year. These include the possible surfacing of a new variant of Covid-19 and other mutations; increase in interest rates; uncertainties related to the election; threat of escalation of violence / war in Taiwan, North Korea and Ukraine; the financial collapse of Chinese real estate companies; and cybersecurity issues. (KOC)

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