Moody’s raises Philippines 2023 growth target to 6.1%

MANILA, Philippines — The research arm of the Moody’s Group has raised its 2023 growth forecast for the Philippines to 6.1 percent from the previous target of 5.7 percent, making the country the fastest growing economy in the region.

Steven Cochrane, chief economist for Asia Pacific at Moody’s Analytics, said the Philippines, India, China and Indonesia would be the leaders of gross domestic product (GDP) growth in the region this year.

The Philippine economy is expected to grow faster than India’s 5.5 percent, China’s 5.4 percent, Indonesia’s 5.2 percent and Vietnam’s five percent.

“Leaders of growth this year will be the Philippines, India, China and Indonesia. All four will continue to benefit this year from targeted fiscal support that will add to near-term growth,” Cochrane said.

The revised GDP growth forecast of Moody’s Analytics is well within the six to seven percent target set by government economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC).

Cochrane said that both the Philippines and Indonesia have substantial infrastructure construction programs to improve badly needed highways and transport services.

Last year, the Philippines emerged as the third fastest growing economy in the region with a GDP growth of 7.6 percent, next to Malaysia’s 8.7 percent and Vietnam’s eight percent.

This was faster than the 6.5 to 7.5 percent GDP growth target penned by the DBCC as the economy further reopened with the lifting of strict COVID quarantine and lockdown protocols.

The country emerged from the pandemic-induced recession with a GDP expansion of 5.7 percent in 2021, reversing the 9.6-percent contraction in 2020 when the economy stalled due to strict lockdown to slow the spread of COVID-19 infections in the country.

For 2024, Moody’s Analytics sees the Philippines emerging as the third fastest growing economy with a GDP growth of 5.4 percent, slower than Vietnam’s 6.6 percent, as well as China’s and India’s identical 5.6 percent, but faster than Thailand’s 5.2 percent, Indonesia’s 4.8 percent and Taiwan’s 4.2 percent.

In 2025, the research arm of the Moody’s Group sees the Philippines emerging anew as the fastest growing economy with a 6.4-percent growth, followed by Vietnam’s 5.8 percent, India’s 5.6 percent, Indonesia’s 5.5 percent, China’s 5.3 percent and Malaysia’s 4.6 percent.

Although inflation remains high in the region, Cochrane said it has begun to shift downward since the beginning of the year.

“The Philippines, India, South Korea, Australia and New Zealand were among those with the highest inflation rates in the second half of last year. All have now eased downward, but most are still above central bank target rates. Thus, monetary policy is expected to remain tight through the end of this year in much of the region, with some easing in policy rates early in 2024,” he said.