High prices, rates seen slowing down PH growth

Sustained high inflation and rising interest rates in the Philippines and abroad are expected to show their impact on the domestic economy in 2023, with a resulting growth rate that is 0.6 percent lower compared to forecasts.

The Inter-Agency Development Budget Coordination Committee projects that Philippine gross domestic product will increase by 6.5 percent to 7.5 percent in 2022 and, from 2023 to 2028, by 6.5 percent to 8 percent.

Economic Planning Secretary Arsenio Balisacan said on Tuesday the country’s prospects remain bright, but it cannot escape the effects of challenges that are being felt globally.

Balisacan was referring to elevated prices of commodities caused by the prolonged war between Russia and Ukraine; and natural calamities that ravaged agricultural output in many countries, including the Philippines.

And in response to rising inflation, monetary authorities in major economies like the United States raised interest rates, a trend that is expected to continue longer and that has prompted expectations of slower economic growth and even recession.

Shrinking economies of major trading partners such as the United States, the European Union and China will send ripples to the Philippines, which will be felt in terms of weaker demand for Philippine exports, weaker inflows of investment and less activities related to tourism.

Balisacan also noted that ongoing global supply disruptions have made the goods that the Philippines imports—including essential inputs for food production—more expensive and have sent the trade deficit to record levels. INQ