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Philippines: GDP growth to fall below 2023 target
MANILA, Philippines — The Philippine economy is seen continuing its growth trajectory next year although at a moderate pace and falling below government expectations amid a slowdown in the global arena.
In a briefing yesterday, Sun Life Investment Management and Trust Corp. (SLIMTC) said the economy is bound to face headwinds due to global recessionary fears.
SLIMTC president and chief investment officer Mike Enriquez said the economy may grow by 5.35 percent in 2023, a significant slowdown from the expected 7.6 percent this year.
This falls below the six to seven percent gross domestic product (GDP) assumption of the Cabinet-level Development Budget Coordination Committee (DBCC).
“Next year, we will probably see a slower pace of growth,” Enriquez said. “We expect continued growth in consumption and capital outlay, even though global growth slowdown is expected to dampen business and consumer sentiment.”
Likewise, SLIMTC also sees a slowdown in inflation as weather and commodity prices dissipate, coupled with slower global growth that should help dampen oil and commodity prices.
From an expected 5.8 percent average inflation this year, Enriquez said the rate should taper off to 4.5 percent by 2023.
Inflation was elevated this year largely due to more expensive oil prices that had crept through food and non-food items in the consumer basket.
“We expect inflation to trend lower and decelerate faster than the US in 2023 due to transport and commodity-heavy nature of our domestic consumer price index,” Enriquez said.
Nonetheless, he said inflation may still be elevated until January as a lingering effect of the recent typhoons.
As inflation will remain high although stable, the Bangko Sentral ng Pilipinas (BSP) is expected to continue raising rates although at a less aggressive pace than this year.
“The BSP will start being more conservative in adjusting their policy rates. It will continue to adjust by 25 basis points in December and another 25 basis points by the first quarter just to be in line with the US Fed and ensure the peso will not depreciate,” Enriquez said.
“We don’t want inflation to go out of hand and weigh down on growth if inflation remains elevated,” he said.
Source: https://www.philstar.com/business/2022/12/14/2230616/gdp-growth-fall-below-2023-target