Philippines seen leading growth in SE Asia

MANILA, Philippines — The Asian Development Bank (ADB) has maintained its economic growth outlook for the Philippines, but expects it to post the fastest growth in Southeast Asia this year and next.

In its Asian Development Outlook July 2023 report released yesterday, the ADB said it retained the gross domestic product (GDP) growth projection for the Philippines this year at six percent, the low end of the government’s six to seven percent target.

ADB’s growth forecast for the Philippines for this year is the highest in Southeast Asia, with Vietnam projected to grow by 5.8 percent, Indonesia by 4.8, Malaysia by 4.7, Thailand by 3.5 and Singapore by 1.5 percent.

For next year, the multilateral lender also kept its GDP growth outlook for the Philippines at 6.2 percent, which is below the 6.5 to eight percent target set by the government.

Still, the ADB expects the Philippines to post the fastest growth in Southeast Asia next year along with Vietnam, which is also projected to grow by 6.2 percent, while the growth forecast for Indonesia is at five percent, Malaysia at 4.9, Thailand at 3.7 and Singapore at three percent.

In supporting its growth forecast for the Philippines, the multilateral lender cited investments and consumption as drivers.

“Robust investment and private consumption drove growth by 6.4 percent year on year in Q1 (first quarter) 2023, supported by rising employment, expanding production and retail sales, and brisk private and public construction,” the ADB said.

It also said tourism has bounced back, while the business process outsourcing sector remains strong.

For Southeast Asia, ADB’s growth forecast was slightly downgraded to 4.6 percent for this year from its earlier projection of 4.7 percent.

It also trimmed its GDP growth outlook for next year to 4.9 percent from five percent, previously.

The ADB said the revisions reflect the weaker global demand for manufactured exports.

“Weaker global demand for manufactured exports has slowed growth even as domestic demand remained intact,” the multilateral lender said.

Similar to the GDP growth outlook, the ADB kept its inflation forecasts for the Philippines at 6.2 percent this year and four percent next year.

The country’s headline inflation continued to ease to 5.4 percent in June from 6.1 percent the previous month amid slower food price increases. This brought average inflation in the January to June period to 7.2 percent, still higher than the Bangko Sentral ng Pilipinas’ two to four percent target range.

The ADB also revised downward its inflation forecasts for Southeast Asia this year and next.

“Downgrades from 4.4 percent to 4.3 percent in 2023 and from 3.3 percent to 3.2 percent in 2024 reflect easing global commodity prices and tighter monetary policy,” the ADB said.