The Asian Development Bank (ADB) has downgraded its growth outlook for the Philippines, citing weaker domestic demand and the decline in exports.
ADB’s Asian Development Outlook for September 2023 published yesterday forecasts the Philippine economy to grow by 5.7 percent this year compared to the 6 percent projection in the April report.
According to the latest report, Philippine economic growth is expected to moderate this year due to inflation and global headwinds before picking up in 2024 as price pressures ease.
The 2024 gross domestic product forecast is maintained at 6.2 percent, with household consumption and public spending on infrastructure and social services seen contributing to the economy’s expansion.
“For the Philippines, we have downgraded our forecast for this year. This is mainly due to the weakening in domestic demand, if we’re comparing it with last year’s performance.
Another factor is the decline in exports. So that’s the reason for the downgrade,” Dulce Zara, ADB senior regional cooperation officer for the Southeast Asian department, said in a webinar yesterday.
“But moving forward, prospects really remain positive for the Philippines. We are looking at investments from the government, given its pipeline of infrastructure projects, and as well as continued consumer spending, which is the main driver of growth for the Philippines,” she added.
ADB said downside risks to the outlook are likely to come from global headwinds, such as geopolitical tensions and a sharper-than-expected slowdown in major advanced economies.
“The Philippines’ growth story remains strong despite an expected moderation in 2023.
Public investment and private spending fueled by low unemployment rate, sustained increase in remittances from Filipinos overseas and buoyant services including tourism will support growth,” said Pavit Ramachandran, ADB Philippines country director.
Forecasts for inflation are maintained at an average of 6.2 percent in 2023 and 4 percent in 2024, the report said.
However, possible severe weather disturbances including the El Niño dry weather phenomenon, pressures from elevated global commodity prices, and second round effects from higher transport fares and minimum wage hikes could slow the pace of inflation easing, it added.
