AMRO retains growth outlook for Philippines

MANILA, Philippines — The Association of Southeast Asian Nations (ASEAN)+3 Macroeconomic Research Office (AMRO) has maintained its growth forecast for the Philippines for this year and next year, but a slower recovery in China and economic growth in the US and Europe were cited as risks to the outlook.

In its July quarterly update of the 2023 ASEAN+3 Regional Economic Outlook released yesterday, the AMRO kept its growth forecast of 6.2 percent for the Philippines for this year.

This is lower than the 7.6 percent gross domestic product (GDP) growth posted by the country last year, but within the government’s six to seven percent growth goal for this year.

AMRO also retained its 6.5 percent growth forecast for the Philippines for next year.

This forecast is at the low end of the government’s 6.5 to eight percent growth target for 2024.

AMRO chief economist Hoe Ee Khor said in a virtual press conference, the growth outlook for the Philippines was maintained as it has done relatively well in sustaining its growth performance.

“I think that is partly because the structure is quite different from the other ASEAN economies. The other economies are much more dependent on manufacturing goods export, whereas in the case of the Philippines, it’s much more a service-driven economy. And because of that I think it has not been affected as much by the headwinds, external headwinds and has benefitted from the recovery of the services sector,” he said.

While the Philippines has not been affected as much by the strong downturn in exports compared to the other ASEAN countries, he said there are risks that may affect the country’s growth, such as a recession in the US or Europe and faltering recovery in China.

Aside from the growth outlook for the Philippines, AMRO also retained its inflation forecasts for the country at 5.9 percent for this year and 3.8 percent for next year from last year’s average of 5.8 percent.

The country’s headline inflation rate slowed down for the fifth straight month in June to 5.4 percent from 6.1 percent in May largely due to slower food price upticks. This brought the average inflation rate to 7.2 percent.

For the ASEAN+3 region covering Southeast Asian countries, as well as China, Hong Kong, Japan and South Korea, AMRO maintained its GDP growth forecast at 4.6 percent for this year, and 4.5 percent for next year.

Meanwhile, AMRO trimmed its growth forecast for ASEAN to 4.5 percent for this year from 4.9 percent previously, but upgraded the growth outlook for the region to 5.3 percent for next year from an earlier projection of 5.2 percent.

While the threat of the recession in the US and Europe are lower now, AMRO is of the view this cannot be fully dismissed.

“Downside risks to the region’s outlook have receded since April, but we are not out of the woods yet,” Khor said.

“Heightened financial stress from tighter US monetary policy is a risk that the ASEAN+3 policymakers must continue to guard against,” he said.