MANILA -The Philippines and India will continue to be the fastest-growing economies in Asia-Pacific in 2023 at 6 percent, thanks to a strong labor market and upbeat consumer demand, according to Moody’s Analytics.
The research firm said this was the prevailing outlook despite the economic slowdown in China, which is one of the region’s powerhouses.
Moody’s Analytics said in a commentary that recent economic data from China suggest that gross domestic product growth in the mainland could be lower than their forecast of 5.4 percent.
And while Chinese policymakers are expected to expand stimulus measures that will support household spending, the housing market, and private sector investment, high debt among households may limit the impact of any such stimulus.
Also, even private firms operating in China may stay hesitant to invest until they are certain they will be allowed to independently manage their growth.
Considering this, Moody’s Analytics forecasts that the fastest growth in the region will continue to be seen in India, the Philippines, Indonesia (at 5.3 percent), and Vietnam (5.2 percent).
“All have strong labor markets, supportive fiscal policies focused on infrastructure improvement, education and health care, and rebounding consumer demand,” the company said. Meanwhile, weak global growth has pushed dampened exports since April, and has caused production to either grow more slowly or decline.
Thus, exports from markets across the Asia-Pacific region, including the Philippines, have weakened even if their domestic economies have remained generally robust.
Further, for the Philippines, the country is not benefiting much from a resurgence of outbound tourism from China. The Philippines, along with Japan, have a relatively lower rate of return of visitors from China.
The number of tourists from the mainland that arrived in May 2023 accounted for less than 20 percent of their number in May 2019.
Only Taiwan was worse, with less than 10 percent, considering geopolitical tensions with the mainland. “Still, both [the Philippines and Japan] report solid travel and hospitality industries at the moment, including price increases for transport and hospitality services,” Moody’s Analytics said.