IMF slashes Philippines' growth outlook to 5.3% in 2023

The International Monetary Fund (IMF) has downgraded its growth forecast for the Philippine economy this year, mainly due to the lackluster economic performance in the second quarter.

From its earlier projection of 6.2% in the July 2023 World Economic Outlook Update, the IMF now expects the country’s gross domestic product (GDP) to grow slower at 5.3% in 2023.

Following the conclusion of the IMF’s Article IV Mission this year, Mission Chief Shanaka Jayanath Peiris said the lower growth outlook was weighed down by ”mainly due to Q2.”

Peiris was referring to the slower second quarter GDP growth at 4.3%, from 6.4% in the first quarter.

The second quarter GDP performance is the economy’s slowest footing in nine quarters since the country entered the positive territory in the middle of 2021 following a pandemic-induced recession— amid high inflation that tempered consumption during the period.

“The main downside risks to the outlook include persistently high global and domestic inflation that could necessitate a further tightening of monetary policy, an abrupt global slowdown putting downward pressure on goods and services exports, an intensification in geo-political tensions, and depreciation pressures stemming from capital outflows under volatile market conditions,” Peiris said.

The Asian Development Bank (ADB) and the World Bank have earlier downgraded their growth projections for the Philippines this year.

The ADB revised down its forecast to 5.7% from 6%, while the World Bank downgraded its outlook to 5.6% from 6%.

Finance Secretary Benjamin Diokno has floated the possibility of revising the economic managers’ growth targets as it is poised to review the first half GDP performance.

The economic managers have set their GDP growth target for 2023 at 6% to 7% and 6.5% to 8% for 2024 to 2028.

For next year, Peiris said the Philippine economy is seen to grow by 6%, “supported by an acceleration in public spending and improved external demand for Philippine exports."—AOL, GMA Integrated News