Jonathan Kho, Standard Chartered Bank economist for Asia and the Philippines(Photo from Standard Chartered Bank) MANILA - The Philippine economy is seen to have expanded by 5 percent in 2021 and is forecast to grow by 7.5 percent this year, an economist of Standard Chartered Bank said Friday. Both gross domestic product (GDP) projections are within the inter-agency Development Budget and Coordination Committee's (DBCC) assumption of a 5 percent to 5.5 percent expansion for last year and a 7 percent to 9 percent assumption for 2022. In a virtual briefing, Jonathan Kho, Standard Chartered Bank economist for Asia and the Philippines, said the projected quarter-on-quarter output for the last quarter of 2021 is 6.5 percent, higher than 3.8 percent from July to September that year. Kho said their growth projection for the domestic economy this year is higher than the previous forecast of 6.5 percent, attributing it to base effects, continued economic re-opening that boosts employment growth, fiscal consolidation, and accommodative monetary policy. He said they expected stronger economic recovery last year but the Delta variant of the coronavirus disease 2019 (Covid-19) greatly affected the region. "(The) Philippines was also hit, especially in Q2. But after that, we saw (a) pretty strong recovery in Q3. So just on the basis of that, I think, on the back of lower base effect in 2021, as well as, I think, the pretty strong recovery we saw in Q3 and probably going forward, our growth forecast was revised higher to 7.5 percent," he said. The domestic economy snapped from a five-quarter contraction starting in the second quarter of 2021 when it posted a growth of 12 percent, followed by a 7.1 percent expansion in the next three months. Kho noted that the employment situation in the country is improving, calling it a plus for the economic recovery. Philippine Statistics Authority data show that the unemployment rate declined to 6.5 percent in November 2021 from 7.4 percent in the previous months and 8.7 percent at the start of the year. However, the underemployment rate rose to 16.7 percent last November from the previous month's 16.1 percent. Kho said the general improvement in the labor market is among the factors they consider that would prompt monetary authorities to hike key policy rates in the fourth quarter of this year. The Bangko Sentral ng Pilipinas' (BSP) policy-making Monetary Board (MB) slashed the central bank's key rates by a total of 200 basis points in 2020 to help buoy the domestic economy from the impact of the pandemic. Kho said they forecast the key rates to be increased by a total of 50 basis points this year and 100 basis points next year. He said the BSP has adopted an "ultra-accommodative" policy stance since the pandemic began. "Some normalization there is possible, as output gap actually closes. And we actually see the output gap turning positive next year," he added. (PNA) }