Citi upbeat about Philippine economy in 2023 despite global challenges

American banking giant Citi on Wednesday said it remains optimistic about the prospects of the Philippine economy this year despite external headwinds.

"GDP growth in 2022 beat expectations, and we continue to see some upside risks to the 2023 growth outlook," Nalin Chutchotitham, Citi Philippines economist, said during the virtual 2023 Citi Markets Economic Briefing.

For the entire 2022, the economy as measured by gross domestic product (GDP), the total value of goods and services produced in a specific period, grew 7.6%

Last year’s economic growth was the highest since 1976.

The positive outlook for the Philippine economy came against the backdrop of an anticipated "tough year" for the world economy.

"We expect the global economy to have a tough year ahead given the lagged impact of tighter monetary and fiscal policies," said Joanna Chua, head of Citi Asia Economics and Strategy.

Chua, however, said that positive signs are still being seen in the global economy.

"China has abandoned its zero-COVID strategy much faster than anticipated; the euro area has enjoyed a warmer than expected winter, which has helped manage ongoing energy shocks; and recent US data has shown lower inflation against resilient, albeit slowing economic activity," she said.

Chutchotitham said inflation remains a key concern for the medium term in the Philippines and that the Bangko Sentral ng Pilipinas (BSP) is expected to hike the policy rate by 50 basis points to 6.0% in the first half of 2023.

Last December, Development Budget Coordination Committee chairperson and Budget Secretary Amenah Pangandaman said that the economic team expects growth of 6.0% to 7.0% in 2023, lower than the previous projection of 6.5% to 8.0%.

The expected global economic slowdown and the resumption of lockdowns in China as COVID-19 cases continue to rise are among the external factors that are reportedly being taken into account.  —VBL, GMA Integrated News