The economy is expected to moderate this year from last year’s forecast-beating outturn but will remain on a healthy expansion mode, underpinned by rising domestic demand and a recovery in services particularly tourism, the Asian Development Bank (ADB) said.
In the Asian Development Outlook April 2023 report released on Tuesday, ADB has forecasted that the Philippine economy, as measured by the gross domestic product (GDP), would grow 6.0 percent this year, climbing further by 6.2 percent in 2024.
ADB’s 2023 growth outlook is within the economic managers GDP forecast of 6.0 percent to 7.0 percent.
ADB said a recovery in employment and retail trade, sustained expansion in the manufacturing sector, and rising public infrastructure spending will support growth.
However, risks from a sharper-than-expected slowdown in major advanced economies, heightened geopolitical tensions, and inflation stickiness could dampen the outlook for GDP growth.
“The Philippines will grow at its potential this year and next and is on track toward its goal to become an upper middle-income country,” said ADB Philippines Country Director Kelly Bird.
Bird said key to sustain a strong growth momentum is keeping public infrastructure spending at levels above 5.0 percent of GDP, as the government has planned for this year and in the medium term.
“High-impact infrastructure projects that will help connect communities to markets and public services and provide access to jobs and livelihood will help increase rural incomes and support inclusive growth,” Bird said.
Meanwhile, inflation is expected to average 6.2 percent in 2023 before easing to 4.0 percent in 2024, according to the report.
Local food supply constraints and rising global commodity prices led to high inflation rates in early 2023.
Inflation is projected to decelerate in the second half of 2023 and through 2024 as the series of monetary policy tightening take effect and global commodity prices ease.
