MANILA, Philippines — The ASEAN+3 Macroeconomic Research Office (AMRO) has maintained its gross domestic product (GDP) growth projection for the Philippines for this year but trimmed its forecast for next year as it expects a slowdown in the US and Europe to affect the country’s economic growth.
In its Quarterly Update of the ASEAN+3 Regional Economic Outlook report released yesterday, AMRO kept its GDP growth projection for the country at 6.9 percent.
To recall, AMRO hiked its GDP growth projection for the Philippines to 6.9 percent last July from the 6.5 percent it provided last April.
AMRO’s growth projection is within the government’s target of 6.5 percent to 7.5 percent for this year.
For next year, however, AMRO cut its GDP forecast for the country to 6.3 percent from 6.5 percent, previously.
AMRO’s new forecast is below the 6.5 percent to eight percent economic growth goal set by the government for next year.
AMRO chief economist Hoe Ee Khor said in a virtual briefing yesterday, the forecast for next year was lowered due to challenges seen ahead.
“All the countries are facing stronger headwinds going forward because of the slowdown in the US and maybe a recession in Europe. And because of that, the external demand is going to be much weaker,” he said.
He said a major recession or slowdown in the US could also impact remittances being sent by overseas Filipino workers to their families in the Philippines.
For the ASEAN+3 region, AMRO brought down its GDP forecast to 3.7 percent for this year from the 4.3 percent growth projected in July, mainly due to expectations of weaker growth in the Plus 3 economies such as China, Japan and South Korea.
AMRO also cut its GDP forecast for ASEAN+3 to 4.6 percent for next year from the previous 4.9 percent.
“A simultaneous economic slowdown in the US and euro area, in conjunction with tightening global financial conditions, would have negative spillover effects for the region through trade and financial channels,” Khor said.
AMRO’s report also showed revised inflation forecasts for the country for this year and next year.
In particular, AMRO now expects the country’s inflation rate to be at 5.1 percent this year, up from its previous projection of 4.4 percent.
“The inflation rate in the Philippines has been quite high. Although we think it should peak this month or next month and begin to come off. But it is tempering demand in the Philippines,” Khor said.
Inflation quickened to 6.9 percent in September, a four-year high, amid faster upticks in food prices.
For next year, AMRO expects the country’s inflation rate to be at four percent, higher than its previous forecast of 3.8 percent.
Inflation forecasts for ASEAN+3 for this year and next year were also raised.
AMRO expects inflation in ASEAN+3 to reach 6.2 percent this year, higher than the earlier forecast of 5.2 percent.
As for next year, AMRO sees inflation in ASEAN+3 at 3.4 percent, up from the previous forecast of 2.8 percent.