Metro Manila (CNN Philippines, March 31) — The World Bank has downgraded its growth forecast for the Philippine economy to 5.6% in 2023 as high inflation persists in the local market, worsened by slowing global activities.
The figure released in a report on Friday was weaker than the 5.8% initial forecast in October and lower than the 6% to 7% target of the national government.But the bank’s forecast for the Philippines is faster compared with neighboring countries Indonesia (4.9%), Malaysia (4.3%), Thailand (3.6%), and Cambodia (5.2%).World Bank said most major economies in developing East Asia and Pacific (EAP), which includes the Philippines, have bounced back from recent shocks and have been witnessing growth signs.However, output has yet to regain strength and return to pre-pandemic levels.It also noted that while the region’s growth was anchored on strong private consumption and goods exports, regional economies have been seeing “signs of weakening domestic and foreign demand.
Officials earlier this year reported that the Philippine economy expanded by 7.6% in 2022, its strongest since 1976. National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan previously attributed the growth to the “pent-up demand” seen following the easing of COVID restrictions, especially in the last quarter of 2022.
Analysts, however, said in January that the Philippines may fail to keep this momentum amid soaring prices.
READ: Inflation to upset Filipinos’ spending appetite, hurt 2023 economy
The World Bank also noted this in the report, saying that while inflation already peaked in several economies, “it continues to rise in the Philippines and Vietnam.Consumer inflation in the Philippines inched down to 8.6%, but nine commodity groups still posted higher prices. For this year, the central bank expects inflation to average above the upper end of the target range at 6%.The Bangko Sentral ng Pilipinas’ (BSP) tightening was also considered one of the downside risks to the growth.At the same time, macroeconomic policy was becoming less expansionary in most EAP countries,” World Bank said.Even though interest rates were lower in EAP than in other emerging markets and developing economies, they have recently been increasing,” it added.To tame surging prices, the BSP has been hiking interest rates to reduce demand since last year.
