The International Monetary Fund on Tuesday raised its 2023 growth forecast for the Philippines to 6.2 from 6 percent following the strong gross domestic product expansion in the first quarter.
“We had revised slightly upward our forecast for 2023, based on the strong Q12023 outturn,” Ragnar Gudmundsson, IMF resident representative to the Philippines, said in an emailed response when sought for comment on the latest World Economic Outlook update.
The 6.2 percent projection falls within the 6 percent to 7 percent growth forecast announced by the interagency Development Budget Coordinating Committee.
Gudmundsson said, however, the IMF revised downward its growth forecast for 2024 to 5.5 percent from 5.8 percent “because of global headwinds and lagged effects of policy tightening,” Gudmundsson said.
The economy grew by a 46-year high of 7.6 percent in 2022 on the back of reinvigorated economic activity due to the reopening of the economy to greater normalcy.
GDP expanded 6.4 percent in the first quarter, one of the fastest in Asia and outpacing those of bigger economies in the region.
The DBCC maintained its growth assumption of 6.5 percent to 8 percent for 2024 to 2028, taking into account the risks posed by El Nino and other natural disasters, global trade tensions and value chain disruptions, among other factors.
The WEO update for July 2023 predicted that global growth would fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook, it remains weak by historical standards.
“The rise in central bank policy rates to fight inflation continues to weigh on economic activity. Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Underlying [core] inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward,” it said.
The report said the balance of risks to global growth remained tilted to the downside. Inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events, triggering more restrictive monetary policy.
“Sovereign debt distress could spread to a wider group of economies. On the upside, inflation could fall faster than expected, reducing the need for tight monetary policy, and domestic demand could again prove more resilient,” it said.
It said the priority remained achieving sustained disinflation in most countries, while ensuring financial stability.
It said central banks should remain focused on restoring price stability and strengthening financial supervision and risk monitoring.