AMRO trims GDP growth forecast for this year

MANILA, Philippines — The ASEAN+3 Macroeconomic Research Office (AMRO) has trimmed its gross domestic product (GDP) growth forecast for the Philippines for this year, but expects the country to be among the top performers in the region.

Based on AMRO’s Quarterly Update of the ASEAN+3 Regional Economic Outlook released yesterday, the country is expected to post 6.2 percent growth this year, down from the previous forecast of 6.3 percent.

“We expect growth to be back to about 6.2 percent. So this is still a very strong growth rate,” AMRO chief economist Hoe Ee Khor said in a virtual briefing.

While the GDP growth forecast has been revised downward, AMRO’s report showed the Philippines is expected to post the second fastest growth in Southeast Asia this year next to Vietnam, which is projected to grow by 6.8 percent.

AMRO’s GDP forecast for the Philippines for this year is within the government’s six to seven percent growth target.

For 2022, AMRO upgraded its GDP projection for the country to 7.3 percent from the previous 6.9 percent.

“During the course of the year, we were not very sure how well the economy will do because the central bank was tightening policy. But as it turns out, the economy has been very resilient and growth outperformed expectation in the third quarter, and because of that we have revised up the growth rate from 6.9 to 7.3 percent last year,” Khor said.

AMRO’s forecast for the Philippines for 2022 is the third highest in Southeast Asia, with Malaysia expected to post the fastest growth at 8.4 percent, and Vietnam taking second place with a growth of eight percent.

The Philippine Statistics Authority is set to report the country’s full-year economic performance on Jan. 26.

The government has set a 6.5 to 7.5 percent growth target for 2022.

In the January to September period last year, the Philippine economy grew by an average of 7.7 percent.

For the ASEAN+3 region, AMRO is projecting a 4.3 percent growth this year, down from its previous forecast of 4.6 percent on expectations of weakening global demand translating to softer export orders as the impact of the aggressive monetary tightening in the US and Europe becomes more pronounced.

AMRO also brought down its GDP growth projection for 2022 for ASEAN+3 to 3.3 percent from the previous 3.7 percent due mainly to the continuing weakness in the Plus 3 economies, especially China.

The report showed AMRO also revised its inflation forecast for the Philippines to 4.3 percent this year from its previous expectation of four percent.

Last year, the country’s inflation rate averaged 5.8 percent, exceeding the two to four percent target of the Bangko Sentral ng Pilipinas (BSP).

“Inflation is relatively high, but that is because unlike some of the countries, the Philippines does not have rice subsidy to contain inflation,” Khor said.

He said the central bank, however, has been proactive through its monetary tightening to counter inflation.

The BSP raised interest rates by a total of 350 basis points (bps) last year, which brought the overnight reverse repurchase rate to a 14-year high of 5.5 percent.

“I know that the [BSP] governor has mentioned there could be another 25 to 50 bps increase before the end of the tightening cycle, and the plan is also to reduce the reserve requirement ratio by 200 bps. But they will only do that once they see inflation has come off, which I think is the right thing to do,” Khor said.

For the ASEAN+3, the AMRO hiked its inflation forecast for this year to 4.5 percent from the previous 3.4 percent.