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MANILA -Weak demand for Philippine exports along with high growth numbers last year prompted the Asean+3 Macroeconomic Research Office (Amro) to revise downward its full-year 2023 growth forecast for the country to 5.9 percent from 6.2 percent earlier.
Amro announced this as a result of a preliminary assessment made during their recent Annual Consultation Visit to the Philippines from Aug. 29-Sept. 8.
AMRO sent a team led by principal economist Runchana Pongsaparn, which engaged officials of the Bangko Sentral ng Pilipinas and Department of Finance in discussions focused on the risks and challenges facing the Philippines, and policy options to sustain the growth momentum, manage elevated inflationary pressures, restore fiscal buffer, and address long-term structural issues.
Pongsaparn said in a statement that while the expected growth of Philippine gross domestic product in 2023 is now lower compared to their forecast last July, this will edge up to 6.5 percent in 2024 as external demand recovers.
This meant that Amro maintained its forecast for next year.
“Meanwhile, domestic demand is expected to remain robust supported by continued improvement in labor market conditions, lower inflation, robust overseas remittances, and higher government infrastructure spending,” she said.
READ: Slower Philippine export growth seen likely this year
Cloudy outlook
Still, Amro finds the outlook for the Philippines “clouded” by various risk factors and challenges.
The think tank warned that, in the short term, the Philippine economy could be adversely affected by high inflation, especially due to local supply shocks in the food sector.
Also posing risks is an economic slowdown in the Philippines’ major trading partners and volatility in the global financial market, along with tighter financial conditions.
Further, Amro said the country’s long-term growth potential was largely affected by the scarring effects of the pandemic, the pace of infrastructure development, geopolitical risks, and the economic losses from natural disasters, which are being exacerbated by climate change.
The Singapore-based group opines that tightened monetary policy and contractionary fiscal stance is currently an appropriate policy mix amid a positive output gap and persistent inflationary pressure.
Still, Amro suggests that a comprehensive strategy is needed to bolster the Philippines’ medium- to long-term economic growth potential.
Also, Amro recommends that the Philippines sustain a focus on upgrading and upskilling the workforce to embrace a more technology-driven economy, in order to overcome the scarring effects of the pandemic. INQ