AMRO downgrades Philippine economic growth forecast

The Philippine economy is seen to grow at a slower rate than earlier expected due to high inflation and weaker external demand, the ASEAN+3 Macroeconomic Research Office (AMRO) said Monday.

In its latest Consultation Report on the Philippines, AMRO said economic growth is forecast at 5.6% this year, slower than the 5.9% forecast in September, and the 6.2% forecast in July.

It is also slower than the 7.6% growth seen in 2022 which was the highest since 1976.

AMRO cited the country’s inflation as a risk to growth, as this is expected to average 6.0% this year, before moderating to 3.6% in 2024.

Inflation clocked in at 4.9% in October, bringing the year-to-date average to 6.4%, higher than the government’s 2.0% to 4.0% target range.

“In the short term, the impact of high inflation on the economy remains the key concern,” AMRO said in an accompanying statement.

“Economic slowdown in major trading partners, volatility in the global financial markets along with tighter financial conditions could also weigh down on growth outlook,” it added.

AMRO also cited the high core inflation, which reflects “elevated” inflationary pressure on the back of a positive output gap and the second-round effects from minimum wage increases and persistently high expectations.

Growth is then expected to accelerate to 6.3% in 2024, as external demand improves.

“Over the medium to long term, the country’s growth potential faces several challenges, including the scarring effects of the pandemic, a slower pace of infrastructure development, heightened geopolitical risks, and economic losses from extreme weather events,” AMRO said. — DVM, GMA Integrated News