Growth forecast hiked as inflation risk lingers
MANILA -The World Bank now expects better growth prospects for 2023 than it did six months ago, but noted that social protection for poor Filipinos needs to be more efficient as the Philippines remains in the grip of high inflation and other risks occurring here as well as abroad.
The multilateral lender said this even as it raised its growth forecast for the Philippine gross domestic product in 2023 to 6 percent from the 5.4-percent forecast in December.
In the latest edition of its Philippine Economic Update launched on Wednesday, the World Bank said the upward change in the forecast was driven by domestic consumption and investment.
World Bank senior economist Ralph Van Doorn said in a press briefing that addressing inflation required implementing measures such as reducing tariff and non-tariff barriers, enhancing domestic supplies, and bolstering agriculture with extension services, seeds and fertilizers.
“In the face of escalating prices, a comprehensive strategy is needed to guarantee sufficient food for everyone,” Van Doorn said. ‘This entails a more productive agriculture and food system that is resilient to climate risks, serves all consumers, and competes effectively on both local and global markets.
He added that sustained investments in climate change initiatives, particularly in the agriculture sector, would be also beneficial. This could include measures such as extending water-saving drip irrigation systems to rain-fed areas, bolstering the resilience and productivity of agricultural lands, and enhancing water storage capacity for a consistent supply during prolonged dry periods.
Downside risks Meanwhile, Ndiamé Diop, the World Bank’s country director for the Philippines, said that the economic outlook for the Philippines was tilted to the downside, meaning the actual results may be lower than their growth forecast.
Diop said this was so because of the possibility of rising global inflation, higher global interest rates, and an escalation of geopolitical tensions brought about by Russia’s invasion of Ukraine.
He added that, on the domestic front, high inflation remains a risk to the economic outlook due to several factors including natural disasters affecting food supply, the threat of El Niño that could further constrain food production, logistics and supply chain challenges, and pressure from domestic demand.
“It is essential to sustain improvements in social protection to help families, especially the poor and vulnerable, cope with economic difficulties as the country navigates the global slowdown, budget constraints, high prices of basic commodities and climate-related risks,” Diop said.
The World Bank report stated that ensuring an efficient delivery of social protection programs would require speeding up current government reforms, including adoption of the national ID system for social protection delivery, updating the targeting system for identifying poor and vulnerable families, innovations in digital payment systems and strengthening financing mechanisms and readiness for disaster response.
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