The Philippine economy is poised to expand faster than expected this year, albeit still seen to post a slowdown versus 2022, thanks to resilient domestic demand despite high inflation and tight fiscal conditions, the World Bank said on Wednesday.
The World Bank sees the Philippines‘ gross domestic product (GDP) growing at 6.0% this year, upgrading its previous forecasts of 5.4% in December and 5.6% in April. It retained its growth forecasts at 5.9% for both 2024 and 2025.
“Despite the weak external conditions, the strong domestic demand will drive the growth of the economy this year,” World Bank Senior Economist, Ralph Van Doorn, said in a virtual press conference.
Consumption will be supported by better employment, steady remittances, and better consumer sentiment, he said.
The country’s GDP rose by 6.4% year-on-year in the first quarter, with the government targeting 6.0%-7.0% growth for the entire year.
However, downside risks include the possibility of higher-than-expected global inflation, tighter global financial conditions, and an escalation of geopolitical tensions, Van Doorn said.
Domestically, the threat of the El Niño weather pattern and supply bottlenecks are key risks, he added.
The World Bank said the government should address inflationary pressures through both monetary and non-monetary measures, increase revenue, implement investments reforms, and shift to more sustainable energy sources.
Philippine annual inflation eased for the fourth straight month in May to 6.1%. Headline inflation in the first five months of 2023 averaged 7.5%, still well above the central bank’s 2.0%-4.0% target for the year.—Reporting by Neil Jerome Morales; Editing by Kanupriya Kapoor
