Philippine economic growth is expected to remain robust amid high inflation and weaker external demand, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
“The Philippine economy maintained its robust growth momentum in the first three quarters of 2023, following a multi-decade high of 7.6 percent in 2022,” AMRO said in its 2023 Annual Consultation Report on the Philippines published on Monday.
The country’s gross domestic product (GDP) grew by 5.9 percent in the third quarter of the year, bringing the year-to-date economic growth to 5.5 percent.
“GDP growth was robust in the first three quarters of 2023. Despite weaker external demand, the growth momentum is expected to be sustained by resilient household consumption reflecting an improving labor market, lower inflation, robust overseas remittances, and higher government infrastructure spending,” AMRO said.
For this year, AMRO expects the Philippine economy to moderate to 5.6 percent due to high base effects and weaker external demand, before edging up to 6.3 percent in 2024 as external demand recovers.
AMRO however forecasts inflation to remain high this year, driven by buoyant demand and supply shocks.
The report noted that headline inflation is projected to hit 6.0 percent this year and then moderate to 3.6 percent in 2024.
“The high core inflation reflects elevated inflationary pressure due to a positive output gap and the second-round effects from increases in the minimum wages and persistently high inflation expectations,” it said.
AMRO said that in the short term, the impact of high inflation on the economy remains a key concern.
“Economic slowdown in major trading partners, volatility in the global financial markets along with tighter financial conditions could also weigh down on growth outlook,” it said.
AMRO noted however that “concerted efforts by the Philippine authorities in addressing high inflation is welcomed.”
These include monetary and fiscal policies tightening and providing targeted fuel and cash subsidies to the most vulnerable sectors. (PNA)
