PH GDP growth seen losing steam in ʼ23, ʼ24

The growth of the Philippine economy will slow down in 2023 and more so in 2024 before picking up pace again in 2025, as developing economies evade the threat of recession but face the double-edged impact of China’s reopening, according to Moody’s Analytics.

In its latest outlook report for Asia and the Pacific, the financial services firm said that China will see a rebound that will boost trade and tourism in the region.

However, such a recovery “also means that inflation in the region may be more difficult to contain,” Moody’s Analytics said.

Under this scenario, Philippine gross domestic product (GDP) is forecast to grow by 7.1 percent in 2023, slower than the 7.6 percent recorded in 2022, but better than the government’s target rate of 6 percent to 7 percent.

Further, Philippine GDP will grow more slowly at a below-target 5.8 percent in 2024, before regaining lost momentum at an above-target 7.1 percent in 2025.

Moody’s Analytics said the Philippines, along with Thailand and Vietnam, has the most to gain if travel from China can rebound to prepandemic levels.

In these three countries, domestic tourism industries depend the most on visitors from China, who made up between 20 percent and 35 percent of total tourist arrivals in 2019 before the pandemic.

Steady rates

Meanwhile, most central banks in the region—including the Bangko Sentral ng Pilipinas—are expected to end their tightening cycles during this first quarter of 2023 and to hold rates steady through the year.

“However, higher-than-expected inflation could slow the pace of growth in the region, and if regulators choose to raise policy interest rates later in the year, it would put additional brakes on economic growth,” it said.

“The risk is higher in other parts of Southeast Asia, particularly in the Philippines and Vietnam, where food prices are still rising and energy subsidies are being scaled back,” it added.

At a forum hosted by the Makati Business Club on Feb. 23, Secretary Arsenio Balisacan of the National Economic and Development Authority said that despite the surprise faster inflation in January—8.7 percent compared with 8.1 percent in December—the rate of increase in prices of goods and services is expected to ease this year.

Balisacan reiterated that the government will prioritize increasing agricultural productivity, food and energy security to temper rising price pressures.

“What we are working on now is to have a more robust information system that would allow us to closely monitor the supply and demand situation,” he said.