MANILA: The Asian Development Bank (ADB) said Wednesday in a report that the Philippine economy is forecast to grow by 5.7 per cent this year compared to the 6 per cent projection in the April report, reported Xinhua.
The country’s economic growth is expected to moderate this year due to inflation and global headwinds before picking up in 2024 as price pressures ease, according to ADB’s Asian Development Outlook in September 2023.
The 2024 gross domestic product (GDP) forecast is maintained at 6.2 per cent, with household consumption and public spending on infrastructure and social services contributing to the economy’s expansion, said the report.
“The Philippines’ growth story remains strong despite an expected moderation in 2023. Public investment and private spending fueled by the low unemployment rate, sustained increase in remittances from Filipinos overseas, and buoyant services including tourism will support growth,” said Pavit Ramachandran, the ADB’s country director for the Philippines.
“The government’s large infrastructure projects should further stimulate consumption, boost jobs, and spur more investment,” he added.
The report said downside risks to the outlook will likely come from global headwinds such as geopolitical tensions and a sharper-than-expected slowdown in major advanced economies.
The government met its target spending on the infrastructure of 5.3 per cent of GDP in the first half of the year and is expected to maintain this level of investment with several big-ticket projects underway.
Services growth was “fairly strong” at 7.2 per cent in the first half of 2023 on top of an 8.8 per cent expansion in the same period of 2022, contributing 80 per cent of the expansion in GDP, said the report.
Official data showed that the Philippines recorded 3.6 million international visitor arrivals from January to August, surpassing 2.65 million visitors in the whole year of 2022.
The report said that higher tourism-related receipts, sustained remittances, and strong service exports, particularly from business process outsourcing, will help lift the current account and offset weak merchandise exports.
The report maintained forecasts for inflation at an average of 6.2 per cent in 2023 and 4.0 per cent in 2024.
However, it warned that the pace of inflation easing would be slowed by possible severe weather disturbances like the El Nino dry weather phenomenon, pressures from elevated global commodity prices, and second-round effects from higher transport fares and minimum wage hikes.
