The Asean+3 Macroeconomic Research Office (AMRO) has downgraded its growth forecast for the Philippines in 2023 and next year, and expects this to fall below the government’s growth assumptions.
According to AMRO’s assessments highlighted in the 2023 Annual Consultation Report on the Philippines published yesterday, growth is forecasted to moderate to 5.6 percent in 2023 from a multi-decade high of 7.6 percent in 2022, and to pick up to 6.3 percent in 2024 as external demand recovers.
The report is based on AMRO’s Annual Consultation Visit to the Philippines from August 29 to Sept. 8, 2023, and data and information available up to Nov.r 9, 2023.
However, AMRO’s latest growth estimates is lower compared to its October 2023 quarterly update of the Asean+3 Regional Economic Outlook report, which then showed that the Philippines will grow by 5.9 percent this year and 6.5 percent in 2024.
AMRO’s latest projections also fall below the government’s growth outlooks of six to seven percent this year and 6.5 to eight percent over the medium term.
Headline inflation is expected to rise from 5.8 percent in 2022 to six percent in 2023 and then moderate to 3.6 percent in 2024, within the two to four percent inflation target, AMRO said.
“The Philippine economic outlook is clouded by various risk factors and challenges. In the short term, high inflation, economic slowdown in major trading partners and volatility in global financial markets along with tighter financial conditions could pose risks,” the report said.
“Long-term growth potential is largely affected by the scarring effects of the pandemic, the pace of infrastructure development, geopolitical risks and economic losses from natural disasters that are being exacerbated by climate change,” it added.
According to AMRO, concerted efforts by the Philippine authorities in addressing high inflation is welcome.
“In the long term, the Philippine economic growth potential could be bolstered by a comprehensive strategy. To overcome the scarring effects of the pandemic and help the workforce embrace a more technology-driven economy, upgrading and upskilling is crucial,” AMRO said.
“Policies and measures to attract investments, particularly foreign investments and promote exports of both goods and services are the underpinnings of long-term economic development. Infrastructure investment, digitalization and development of a green economy can help strengthen the country’s competitiveness,” it added.
Meanwhile, according to the latest issue of the Market Call released yesterday, the growth momentum of the economy should continue in the fourth quarter.
It sees full-year growth at 5.8 percent as infrastructure spending has gained traction, while consumer spending should improve with southbound inflation rate.
“Weaker crude oil prices have set in and this should offset possible gains in rice prices if output succumbs to El Nino. National government debt will still rise in Q4 but the debt-to-GDP (gross domestic product) ratio should fall to 60.5 percent from 60.9 percent in 2022,” the report said.
“The peso-dollar will likely strengthen temporarily in November-December as Overseas Filipino Workers’ remittances swamp the foreign exchange market,” it added.
