The Asean+3 Macroeconomic Research Office (AMRO) has maintained its growth and inflation outlooks for the Philippines for this year and next as it highlighted the economy’s service-driven growth.
According to the July quarterly update of the 2023 Asean+3 Regional Economic Outlook, the Philippines is projected to grow by 6.2 percent this year and 6.5 percent in 2024.
Inflation, meanwhile, is seen hitting 5.9 percent this year before going down to 3.8 percent in 2024.
These projections are the same as the figures released in its April report.
“Philippines has done relatively well in terms of sustaining its growth. I think that’s partly because the structure of the economy is quite different from other Asean countries,” Hoe Ee Khor, AMRO chief economist, said in a virtual briefing yesterday.
“The other economies are much more dependent on manufacturing goods export, whereas in the case of the Philippines, it’s much more service-driven economy. And because of that, I think it has not been affected as much by the external headwinds and has benefited from the recovery of the services sector,” he added.
AMRO’s forecasts are well within the government’s own projections.
The Development Budget Coordination Committee’s (DBCC) economic growth assumptions are six to seven percent for 2023 and 6.5 to eight percent for 2024 to 2028.
The average inflation rate assumption of the DBCC for 2023 is five to six percent as of June, and two to four percent for 2024 to 2028.
Meanwhile, global wealth and asset management firm Manulife Investment Management and Trust Corp. noted inflation volatility in the Philippines remains “acute” that there is a likelihood of further rate hikes in its policy rates moving forward.
This is likely so, as the Bangko Sentral ng Pilipinas (BSP) had stated inflation risks are “heavily tilted to the upside,” according to Sue Trinh, Manulife co-head of global macro strategy.
Trinh in a briefing Tuesday said among central banks in Southeast Asia, the BSP had the most aggressive tightening cycle, having raised interest rates by 400 basis points since last year.
Trinh, however, noted the BSP’s future hikes may not be as aggressive as the expected increases of the US Fed and a number of Southeast Asian economies.
Trinh noted the monetary policy market around the world remains convinced that rates have not yet peaked and that cuts are not on the table any time soon, as discussed during the European Central Bank’s forum in Portugal last month. – With Ruelle Castro
