MANILA, Philippines — The Philippine economy is expected to post as slower growth this year with the gross domestic product (GDP) expansion easing to 5.6 percent, driven by consumption and higher infrastructure spending, according to S&P Global Market Intelligence.
“Continued rapid GDP growth of around 5.6 percent is expected in 2023, helped by continued strong private consumption spending, an upturn in government infrastructure spending and improving remittance inflows,” S&P Global Market Intelligence chief economist for Asia Pacific Rajiv Biswas said in a report.
The forecast is below the government’s six to seven percent growth target for 2023.
From January to September last year, the country’s GDP grew by 7.7 percent, slightly higher than the government’s 6.5 to 7.5 percent target.
Biswas said economic growth would accelerate further if the gradual reopening of domestic and international tourism, which started last year as pandemic-induced restrictions were eased, would be sustained this year.
Prior to the pandemic or in 2019, the gross direct tourism value added as a share of the country’s GDP was estimated at 12.7 percent, including international tourism spending estimated at P549 billion and domestic tourism spending estimated at P3.1 trillion.
“Due to the importance of domestic tourism in the overall contribution of tourism to GDP, the recovery of domestic tourism could be a significant growth driver in 2023,” Biswas said.
Over the next decade, he said the Philippines is expected to continue growing rapidly, with the total GDP forecasted to reach $830 billion in 2031 from $400 billion in 2021.
As the size of the Philippine economy grows, he said the GDP per capita is also expected to rise to $6,400 in 2031 from $3,500 in 2021.
“A key growth driver will be rapid growth in private consumption spending, buoyed by strong growth in urban household incomes,” he said.
By 2034, he said the Philippines is forecast to become one of Asia Pacific’s $1-trillion economies, joining mainland China, Japan, India, South Korea, Australia, Taiwan and Indonesia as part of the largest economies in the region.
As the Philippine domestic consumer market grows further, he said this should lead to more foreign and domestic investments in the country.
He said the Philippines is expected to benefit from its membership in the Regional Comprehensive Economic Partnership (RCEP) agreement by attracting foreign investments, particularly in manufacturing.
Trade Undersecretary Ceferino Rodolfo said the Department of Trade and Industry remains hopeful that the Senate would ratify the RCEP by the first quarter of this year.
Biswas said significant progress in economic development is also expected over the next decade.
“Rapidly rising per capita GDP and standards of living will help to underpin a broad improvement in human development indicators and should deliver a significant reduction in share of the population living in extreme poverty over the decade ahead,” Biswas added.