The Asian Development Bank said Wednesday its downgraded its 2023 growth forecast for the Philippines to 5.7 percent from 6 percent it made in April 2023, taking into account the risks posed by higher inflation and global headwinds.
The bank, however, kept the 2024 gross domestic product growth forecast at 6.2 percent, with household consumption and public spending on infrastructure and social services seen contributing to the economy’s expansion.
The latest GDP assumptions were contained in its Asian Development Outlook for September 2023.
“[The] Philippine economic growth is expected to moderate this year due to inflation and global headwinds before picking up in 2024 as price pressures ease…,” the report said.
ADB country director Pavit Ramachandran said the Philippines’ growth story remained strong despite an expected moderation in 2023. He said public investment and private spending fueled by low unemployment rate, sustained increase in remittances from Filipinos overseas, and buoyant services including tourism will support growth.
“The government’s large infrastructure projects should further stimulate consumption, boost jobs, and spur more investment,” Ramachandran said.
Downside risks to the outlook are likely to come from global headwinds such as geopolitical tensions and a sharper-than-expected slowdown in major advanced economies, according to the report.
The government met its target spending on infrastructure of 5.3 percent of GDP in the first half of the year and is expected to maintain this level of investment with several big-ticket projects underway.
ADB is helping finance some major projects such as the Malolos-Clark Railway, South Commuter Railway, Improving Growth Corridors in Mindanao Road Sector and Integrated Flood Resilience and Adaptation Project-Phase 1.