20-9-2023 (MANILA) The Asian Development Bank (ADB) released a report on Wednesday stating that the Philippine economy is projected to grow by 5.7% this year, slightly lower than the 6% forecast in the April report.
According to the ADB’s Asian Development Outlook September 2023, the country’s economic growth is anticipated to moderate in 2023 due to inflation and global challenges. However, it is expected to pick up in 2024 as price pressures ease.
The report maintains a GDP forecast of 6.2% for 2024, with contributions from household consumption and public spending on infrastructure and social services, which will drive the expansion of the economy.
Pavit Ramachandran, the ADB’s country director for the Philippines, stated, “The Philippines’ growth story remains strong despite an expected moderation in 2023. Public investment and private spending fueled by a low unemployment rate, sustained increase in remittances from Filipinos overseas, and a buoyant services sector, including tourism, will support growth. The government’s large infrastructure projects should further stimulate consumption, boost jobs, and spur more investment.”
The report highlights potential downside risks to the economic outlook, including global challenges such as geopolitical tensions and a sharper-than-expected slowdown in major advanced economies.
The Philippine government has met its target spending on infrastructure, amounting to 5.3% of GDP in the first half of the year, and is expected to maintain this level of investment with several significant projects currently underway.
The services sector experienced “fairly strong” growth of 7.2% in the first half of 2023, building on an 8.8% expansion during the same period in 2022. This sector contributed 80% to the overall GDP expansion, as stated in the report.
Official data reveals that the Philippines recorded 3.6 million international visitor arrivals from January to August, surpassing the total number of visitors in the entirety of 2022, which stood at 2.65 million.
The report suggests that higher tourism-related receipts, sustained remittances, and robust service exports, particularly from business process outsourcing, will help improve the current account and offset the weakness in merchandise exports.
Inflation forecasts remain unchanged, with an average of 6.2% projected for 2023 and 4.0% for 2024.
However, the report cautions that the pace of inflation easing may be hindered by potential severe weather disturbances such as the El Niño dry weather phenomenon, pressures arising from elevated global commodity prices, and second-round effects from higher transport fares and minimum wage hikes.
