Philippines Maintained Strong Growth Momentum According to AMRO
According to the ASEAN+3 Macroeconomic Research Office (AMRO), Philippine economic growth is predicted to continue robust despite rising inflation and reduced foreign demand.
In its 2023 Annual Consultation Report on the Philippines, published on Monday, AMRO stated, “The Philippine economy maintained its robust growth momentum in the first three quarters of 2023, following a multi-decade high of 7.6 percent in 2022.”
The Philippines’ Gross Domestic Product (GDP) increased by 5.9 percent in the third quarter of the year, bringing the year-to-date growth rate to 5.5 percent.
AMRO noted, “GDP growth was robust in the first three quarters of 2023. Despite weaker external demand, the growth momentum is expected to be sustained by resilient household consumption reflecting an improving labor market, lower inflation, robust overseas remittances, and higher government infrastructure spending.”
Due to significant base effects and lower external demand, AMRO expects the Philippine economy to moderate to 5.6 percent this year before increasing to 6.3 percent in 2024 as external demand recovers.
On the other hand, AMRO expects inflation to stay high this year owing to strong demand and supply shocks.
According to the report, headline inflation is expected to reach 6.0 percent this year before falling to 3.6 percent in 2024.
AMRO mentioned, “The high core inflation reflects elevated inflationary pressure due to a positive output gap and the second-round effects from increases in the minimum wages and persistently high inflation expectations.”
AMRO cited that in the short term, the hit of high inflation on the economy remains a major concern.
AMRO stated, “Economic slowdown in major trading partners, volatility in the global financial markets along with tighter financial conditions could also weigh down on growth outlook.”
However, AMRO noted, “concerted efforts by the Philippine authorities in addressing high inflation is welcomed.”
These include tighter monetary and fiscal policies, as well as targeted fuel and cash subsidies to the most vulnerable sectors.