The Philippines is projected to post the fastest economic growth among the Asean+3 economies for this year and next, with the expansion to be supported by domestic demand, according to a report published by the Asean+3 Macroeconomic Research Office (AMRO).
The October 2023 quarterly update of the Asean+3 Regional Economic Outlook report showed that the Philippines will grow by 5.9 percent this year and 6.5 percent in 2024.
While the outlook for this year has been revised downwards versus the 6.2 percent projection in the July quarterly update, the forecast for the country is still the strongest compared to the outlook for other Asean economies as well as for China, Hong Kong, Japan and Korea.
“For the Philippines, the second quarter turned out to be weaker than we expected but we are still quite bullish on the Philippines compared to consensus. Our forecast is 5.9 percent, above the consensus,” Hoe Ee Khor, AMRO chief economist, said in a virtual briefing.
“The Philippines has surprised us (in the) last two years because domestic demand has been quite strong and is holding up quite well despite the increase in interest rates, and we think this will continue,” he added.
Inflation forecast for the Philippines has been revised downwards to 5.5 percent this year from the previous outlook of 5.9 percent, while for 2024 the projection is kept at 3.8 percent.
“Inflation is coming off, although because of the recent increase in food prices headline inflation picked up a little bit, so that’s going to be a drag on growth going forward if inflation continues to pick up,” Khor said.
“Otherwise, the domestic demand is quite strong and it’s being supported by remittance inflows,” he added.
Khor however said the El Niño is the “wild card” for inflation, especially if it leads to additional restrictive trade policies on key agricultural imports such as rice.
“We need to see going forward… how bad El Niño is. If it gets worse, then I think the food prices will go up everywhere, not just in the Philippines, but in the rest of the region,” Khor said.
