MANILA —The Philippine economy will likely fail to hit the government’s growth target this year after a projected underperformance in 2023 amid persistent inflation risks and a high interest rate environment, the Asean+3 Macroeconomic Research Office (Amro) said.
In its updated regional outlook released on Thursday, Amro, an independent regional surveillance unit founded by Asean+3 finance ministers, expected growth to hit 6.3 percent this year, a less upbeat outlook than its old projection of 6.5 percent back in October last year.
If realized, growth in 2024 will miss the Marcos administration’s watered-down target of 6.5 to 7.5-percent expansion.
But Amro’s outlook is more optimistic compared to others. The World Bank expects the local economy to grow by 5.8 percent in 2024 while the Asian Development Bank is betting on a 6.2-percent expansion.
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At the same time, the Philippines is still poised to be the fastest-growing economy in Southeast Asia this year, if Amro’s new projection is to be believed. The country will also outperform the region which, Amro said, is forecast to grow 4.9 percent on average in 2024.
Weaker than expected
Based on Amro’s updated report, growth this year will be faster than the projected 5.6-percent expansion in 2023, which was a downgrade from the group’s previous prediction of 5.9-percent growth.
The official gross domestic product (GDP) figures for 2023 will be out on Jan. 31. If Amro’s forecast is correct, the government will fail to hit its goal of making the economy grow between 6 and 7 percent last year, and will mark a significant slowdown from the 7.6-percent expansion in 2022.
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Explaining the downward adjustments to its forecasts, Hoe Ee Khor, chief economist at Amro, said the group was “too optimistic on the growth momentum,” adding that high interest rates meant to tame stubbornly high inflation crimped growth last year.
“Momentum is weaker than expected,” Khor said.
“The Philippine economy has held up very well despite high inflation and interest rates, and it’s much less dependent on exports than other countries in the region,” he added.
Latest government data showed inflation eased 3.9 percent in December 2023, from 4.1 percent in November. —Ian Nicolas P. Cigaral