ADB sees Philippine growth easing this year

MANILA, Philippines — The Asian Development Bank (ADB) expects Philippine economic growth to moderate this year amid global headwinds and high inflation.

In its Asian Development Outlook April 2023 report released yesterday, the ADB said it is forecasting Philippine gross domestic product (GDP) growth at six percent.

This forecast is the same as the GDP growth that the ADB projected for the country this year in the Asian Development Outlook Supplement report released in December 2022.

ADB’s GDP forecast for this year is lower than the 7.6 percent economic growth posted by the country in 2022.

It is also at the low end of the government’s six to seven percent growth target for this year.

In Southeast Asia, the ADB expects the Philippines to post the second fastest GDP growth this year, as Vietnam takes the lead and is projected to grow by 6.5 percent.

For next year, the ADB expects the Philippines to grow by a faster 6.2 percent.

ADB’s GDP forecast for the Philippines next year is below the government’s 6.5 to eight percent growth goal for 2024.

ADB Philippines country director Kelly Bird said the country’s economic growth would be supported by domestic demand, accelerated public infrastructure investment, employment recovery and steady remittances from overseas Filipinos.

He said tourism, retail trade as well as the expansion of the manufacturing sector would also serve as growth drivers.

“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,” he said.

Bird said there are downside risks to the country’s growth, however, such as a sharper than expected global growth slowdown and elevated inflation.

“Inflation has been sticky in the Philippines. We’ve seen in a lot of countries it has peaked and is starting to show signs of declining.

But the Philippines is lagging other countries and again, I think it is due to supply constraints in the domestic market, which has been intensified by restrictions on the ease of imports of several agricultural commodities,” he said.

ADB expects inflation in the country to average 6.2 percent this year, and ease to four percent next year.

The multilateral lender sees inflation decelerating in the second half of this year through 2024 as monetary tightening takes effect and global commodity prices moderate.

Inflation eased slightly to 8.6 percent in February from the 14-year high of 8.7 percent in January.

The Philippine Statistics Authority is set to release March inflation data today. The Bangko Sentral ng Pilipinas expects the inflation rate to have slowed and settled within the range of 7.4 to 8.2 percent.

Bird said infrastructure investment is going to be crucial to the country’s economic growth this year and subsequent years.

He also said the Philippines would need to address issues on food security, which is expected to become a long-term problem because of the impact of climate change on agricultural production.

“Like most other economies, the Philippines will be increasingly challenged by the impacts of climate change and the effects of emerging technologies on the labor market,” he said.