economic growth – Page 18 – Author Carlo Carrasco

World Bank raises forecast on Philippine economy growth for 2023

June 12, 2023June 8, 2023carlocarrasco

With the year 2023 nearing the half-way point, the World Bank revised its forecast on the Philippine economy seeing a 6% growth (versus the previous 5.4% growth forecast), according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the Manila Bulletin news article. Some parts in boldface…

THE PHILIPPINE ECONOMY is likely to grow by 6% this year amid strong domestic demand and despite elevated inflation, the World Bank said, raising its forecast from 5.4% in January.

A recovery in jobs, improved consumer sentiment and strong remittances from Filipinos overseas would drive local consumption, the multilateral lender said in its Global Economic Prospects report on Wednesday.

“Despite external challenges, high domestic inflation and tight monetary conditions, domestic demand has once again remained resilient, fueling growth,” World Bank Country Director for the Philippines Ndiame Diop separately told a virtual news briefing.

The latest growth forecast is the lower end of the government’s 6-7% growth target this year. The Philippine economy grew by 6.4% in the first quarter, slower than 8% a year ago and 7.1% a quarter earlier.

“Despite weak global conditions, our upward revision reflects this continued strength in domestic demand,” World Bank Philippines Senior Economist Ralph van Doorn said.

But the potential global slowdown could still affect growth. “Although the global economy displayed remarkable resilience in early 2023, economic conditions will remain subdued for the rest of 2023,” Mr. Diop said.

He said global growth is expected to wane due to “persistent inflation, slowdown of global trade and the effect of recent monetary tightening.”

The World Bank expects global growth to slow to 2.1% this year, though this is higher than its earlier 1.7% projection. It also sees global growth reaching 2.4% next year and 3% in 2025.

“Risks remain tilted to the downside,” Mr. Diop said. “Recent episodes of market instability have raised concerns of a potential spillover. The possibility of further monetary tightening amid sticky core inflation could raise the cost of global financing and lead to a more pronounced and prolonged global slowdown.”

Persistent inflation remained a cause for concern, the World Bank said.

“Although our baseline forecast (shows) inflation will decelerate, it is still the main challenge,” Mr. van Doorn said.

The World Bank expects Philippine inflation to average 5.7% this year, higher than its earlier 4.2% forecast.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you agree with the World Bank’s analysis about economic growth for the Philippines this year? Do you think the Philippine economy can do better than expected by the end of 2023?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco

Over 2 million foreign tourist arrivals in the Philippines counted as of May 12, 2023

May 17, 2023May 17, 2023carlocarrasco

Even though new cases of COVID-19 grew significantly nationwide over the past several weeks, that did not stop the forward momentum for Philippine tourism as the Department of Tourism (DOT) confirmed that foreign tourist arrivals in the country surpassed the 2,000,000 mark as of May 12, 2023, according to a Philippine News Agency (PNA) news article. Take note that that total number of foreign tourist arrivals in the country for the year 2022 was at 2.65 million and it looks likely for the Philippines to exceed that figure before the year ends.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

The Philippines breached the two million mark in international arrivals for the first five months of 2023, surpassing last year’s baseline target.

The Department of Tourism (DOT) announced the good news over the weekend, citing the latest data of 2,002,304 international visitor arrivals from January 1 to May 12 that exceeded the entire 2022 target of 1.7 million foreign visitors.

“Notwithstanding the challenges and difficulties that our country faced, a pandemic and the various calamities that come into our shores, the good news is that these have done nothing to break the Filipino spirit or to diminish the beauty of the Philippines,” DOT Secretary Christina Garcia Frasco said in a news release.

“We’re very optimistic for the prospects in out country in terms of being a tourism powerhouse in Asia, anchored on the strength of our Filipino culture as well as the values of sustainability, resilience and global competitiveness.”

South Koreans made up almost a quarter of the total number of visitors with 487,502 (24.35 percent); followed by Americans with 352,894 or 17.62 percent; Australians, 102,494 (5.12 percent); Canadians, 98,593 (4.92 percent); Japanese, 97,329 (4.86 percent); Chinese, 75,043; Taiwanese, 62,654; British, 62,291; Singaporeans, 53,359; and Malaysians, 36,789.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think that the Philippines will be able to attract the targeted 4.8 million foreign tourist arrivals by the end of this year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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RCBC chief economist says that Philippine economic growth target likely to be hit this year

May 15, 2023May 12, 2023carlocarrasco

In light of the recent news that the Philippine economy grew by 6.4% in the first quarter of 2023, the chief economist of Rizal Commercial Banking Corporation (RCBC) says that the nation’s economic target for this year (for references, click here and here) will likely be hit, according to a Philippine News Agency (PNA) news report.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

The government’s 6 to 7 percent economic growth target will likely be met this year despite possible effects of El Niño, an economist said on Friday.

Rizal Commercial Banking Corporation chief economist Michael Ricafort told the Philippine News Agency (PNA) that the 6 to 7 percent gross domestic product (GDP) expansion is possible amid easing year-on-year inflation that could help reduce the drag of higher prices on economic growth.

“Fed (US Federal Reserve) and local policy rates could also be reduced later this year and into 2024 amid easing inflation, and as the economy further reopens towards greater normalcy with no more lockdowns as a policy priority,” he said.

Inflation reached as high as 8.7 percent in January. It has however started to decelerate and settled at 6.6 percent in April.

Ricafort said the possible effects of El Niño later this year and up to 2024 could lead to reduced agricultural output and some pick up in prices, “but would not have a significant drag on GDP growth.” he said.

“[Philippine] economic growth [is] expected to be among the fastest-growing in the region and among major economies around the world amid favorable demographics of the country with more than 110 million Filipinos, majority of Filipinos already at working age, (and) young average age of less than 25 years old, all of which would support GDP growth of at least 6%-7% in the coming years,” he said.

He noted that other possible drivers of growth would be increased consumer spending due to lower individual income tax rates, high overseas Filipino workers’ remittances, further increase in government spending, the continued growth of business process outsourcing, and the resumption of foreign tourism.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think the Philippines will achieve 2023 economic growth between 6% to 7%?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Muntinlupa City Government releases over P2.5 million zero-interest loans to local entrepreneurs

April 25, 2023April 25, 2023carlocarrasco

Recently in the progressive city of Muntinlupa, the City Government released zero-interest loans to over one hundred and twenty local entrepreneurs amounting to more than P2.5 million, according to a news report by the Manila Bulletin. This is the latest move by the City Government boost the local economy.

To put things in perspective, posted below is the excerpt from the Manila Bulletin news report. Some parts in boldface…

The Muntinlupa City government released P2.58 million worth of loans with zero interest to local entrepreneurs.

A total of 125 entrepreneurs were the beneficiaries of the city government loans released through the Muntinlupa Entrepreneurship Financing Division (MEFD).

“One of the priorities of the local government is focusing on our home-grown entrepreneurs. This is part of our efforts to boost the local economy,” said Mayor Ruffy Biazon.

The beneficiaries, who are composed of micro, small, and medium-sized enterprises, comprised the 148th batch of the long-running program.

Biazon encouraged the beneficiaries to make the most of this opportunity to improve their business and their way of life.

Let me end this piece by asking you readers: If you are a Muntinlupa City resident, what is your reaction to this development? Do you hope to see the City Government release even more zero-interest loans to local entrepreneurs? If you are running a small business in the city, have you availed of the loans from the City Government?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippines tourism gains from influx of South Korean visitors

April 19, 2023April 16, 2023carlocarrasco

Tourism in the Philippines continues to progress in terms of attracting visitors from overseas as tourists from South Korea emerged as the top source of foreign visitors this year, according to a news article published by the Philippine News Agency (PNA).

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

South Korea is again the Philippines’ top source of foreign visitors so far this year.

Tourism Secretary Christina Frasco bared this on Thursday when she greeted a batch of 300 travelers from South Korea at the Mactan-Cebu International Airport.

The travelers are members of the Korea branch of UNICITY, a direct selling company on health functional foods, cosmetics and household items and with over 60 markets globally.

As a reward to their top agents, sellers, and distributors, UNICITY-Korea sends a big volume of incentive groups to Southeast Asian countries annually.

This year, the company is sending 1,400 people in four batches (April 9, 13, 17, and 21) to Cebu.

Department of Tourism data showed a significant pick up in Korean arrivals since last year, with 428,014 or a 16.13 percent share of the country’s arrivals received between Feb. 10 — when the country eased its borders for leisure travelers — up until Dec. 31, 2022.

“The good news is that as of today, we have over 1.5 million tourist arrivals to the Philippines and our number one top source market are the Koreans. So we’re very grateful to our friends from Korea for continuing to show their love for the Philippines as they have come back in droves, and the UNICITY group in particular, has come with a delegation of no less than 1,400 individuals,” Frasco said.

Upon their arrival, the travelers were welcomed with leis and performances by Filipiniana-clad rondalla serenaders as well as by Sinulog dancers.

Prior to the pandemic, Korea ranked number one in terms of visitor arrivals to the Philippines, with 1,989,322 or 24.08 percent of the country’s total number of arrivals for 2019.

Arrivals from Korea declined drastically during the pandemic, dropping to 338,877 and 6,456, for 2020 and 2021, respectively.

“They’re coming on a daily basis and the numbers are increasing by the day. Last year, they were at number two, because it is the United States that [provided] our number one top source market. But this year, the Koreans have reclaimed the number one spot and we send out the message to all our friends in Korea, that you are more than welcome to keep coming back again and again to Cebu, Bohol, Palawan, and the rest of our beautiful islands in the Philippines,” Frasco said.

PH as ideal MICE destination

Frasco noted that the arrival of a delegation as big as the UNICITY group is a welcome development especially with the DOT “seeing MICE tourism become a very strong product for the Philippines and also for Cebu.”

“They are staying for a few days and we expect that this will contribute greatly to the economy of Cebu in particular, and to the rest of the country in general, considering the multiplier effect of tourism is really so that they will support our local tourism stakeholders, our small and medium enterprises, and the like,” Frasco said.

To further boost the Korean tourism source market and visitor arrivals, the DOT, through its office in Korea, carries out marketing initiatives including an online presentation to educate the MICE (meetings, incentives, conference, exhibitions) players in the Philippines about the Korean MICE market, as well as participation to upcoming key events such as business-to-business fairs, and a MICE roadshow.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think the Philippines will continue to attract even more visitors from South Korea? Do you hope to see some of the South Korean visitors settle here in the Philippines and help build up the national economy by establishing legitimate businesses and creating new jobs?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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SBMA chief Paulino declares 2022 a year of record-breaking accomplishments

April 5, 2023April 3, 2023carlocarrasco

During a high-level address to the stakeholders, Subic Bay Metropolitan Authority (SBMA) Chairman and Administrator Rolen C. Paulino declared that 2022 was a year of record-breaking accomplishments and the problems related to COVID-19 did not overwhelm them, according to a Business Mirror news article.

To put things in perspective, posted below is an excerpt from the Business Mirror news article. Some parts in boldface…

Subic Bay Metropolitan Authority (SBMA) Chairman and Administrator Rolen C. Paulino declared record-breaking accomplishments for Subic in 2022, as he made his first State of the Freeport Address (SOFA) here in a ceremony hosted by the Subic Bay Freeport Chamber of Commerce on Tuesday.

Comparing his administration’s undertakings against agency records in the last three years of the Covid-19 pandemic, Paulino presented a selection of successes under his “RCP” program that stood for revenue, customer-care, and plans and programs.

“2022 was a banner year for the SBMA despite the fact that the country was just recovering from the hiatus brought about by the Covid-19 pandemic,” Paulino said.

“It was an opportune time to work together, so we could bounce back from the debilitating effects of the pandemic, [and] achieve our ultimate goal—to attract investments and, more importantly, create employment,” he added.

According to the Subic chief, revenue collections by various SBMA departments “have increased compared to 2021 figures and even surpassed pre-pandemic performance” because of intensive revenue collection measures.

As a result, the SBMA was able to turn over to the National Treasury a total of P1.33 billion, an amount 20 percent higher than the 2021 dividends of P1.11 billion, Paulino said.

Figures from the SBMA Business and Investment Group (BIG) indicated that the Subic agency recorded revenue collections of P1.69 billion from January to November 2022. Paulino was appointed chief of the SBMA in March 2022 at the tail end of the Duterte presidency.

On the other hand, the 2021 SBMA report to President Duterte indicated an operating revenue for the agency in the amount of P3.47 billion, or P270 million higher than the 2020 revenue.

Paulino also said that in July 2022, the Subic Bay Freeport was named the top tourist attraction in Central Luzon and number five in the Philippines, with 9.4 million same-day visitor arrivals in the free port.

SBMA figures indeed showed a growing year-on-year tourism growth, with the number of same-day visitors rising from 7.89 million in 2016 to 8.54 million in 2017, 9.23 million in 2018 and 9.56 million in 2019 before plunging to 5.19 million in 2020 when the Covid-19 pandemic curtailed tourism activities globally. Recovery, however, started immediately in 2021, putting the annual record at 7.37 million.

In terms of investments, Paulino reported approving 133 new investment projects with total committed investments of P14.06 billion and 38 expansion projects with commitments of P36.34 billion.

“That is a significant jump from P591 million in 2021, let alone P160 million in 2020,” he pointed out, crediting the accomplishment to “the aggressive marketing strategy of our Business and Investment Group.”

SBMA’s business group, according to its 2021 report, had recorded a strong performance at the tail end of the pandemic with P17.29 billion in committed investments in 2021, compared to P9.24 billion in 2019 before the pandemic, and P1.55 billion in 2020 at the height of the pandemic.

Paulino also said that with all the economic activities going on in Subic because of new investments, an additional 4,700 jobs will be created soon on top of the 149,681-strong free port workforce today.

The Subic work force has consistently grown in numbers over the years: from 137,547 in 2019 to 138,966 in 2020, the beginning of the Covid-19 health crisis, and to 142,177 in 2021. Majority of the work force belonged to the services sector, which had continuously increased because of the growth in the transshipment and logistics business here, the SBMA Labor Department said.

Meanwhile, Paulino said that in 2022, the SBMA had provided revenue shares to neighboring local government units (LGU). He said Olongapo City received a total of P74.88 million last year, while Subic got P48.77 million; Castillejos, P29.74 million; San Marcelino, P38.54 million; San Antonio, P27.45 million; Morong, P28.1 million; Hermosa, P33.81 million; and Dinalupihan, P39.98 million for a total of P321.27 million.

This remittance was bigger than the LGU shares given by the SBMA during the pandemic: P277.98 million in 2020 and P306.77 million in 2021, but still did not top the shares given by the SBMA in 2019, which was P378.87 million, or even in 2018 at P369.26 million.

I myself was in the Subic Bay Freeport Zone during the summer of 2022 and I personally witnessed the post-pandemic revival there in the forms of tourists enjoying the places and the stores, restaurants and coffee shops attracting lots of customers. Indeed, the socio-economic recovery in Subic Bay Freeport is real and it will continue even though our nation is being hampered by inflation. If you are thinking about having a good time traveling here in the Philippines, I encourage you to visit the Subic Bay Freeport Zone. Also if you are looking for good places to eat or drink at during your next visit to Subic Bay, check out my feature articles of Gourmet Garage Subic and Xtreme Xpresso Café. Also, there will be a big triathlon event there – the NTT ASTC Subic Bay International Triathlon (SuBIT) 2023.

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House of Representatives approve Marcos-backed VAT refund for outbound foreign tourists bill on 3rd and final reading

March 13, 2023March 7, 2023carlocarrasco

It looks like the Philippines will make a major step forward in the highly competitive field of tourism as the House of Representatives recently approved on 3^rd and final reading the proposal on granting Value Added Tax (VAT) refund for outbound tourists, according to a GMA Network news report. The newly approved bill is a measure backed by President Ferdinand “Bongbong” Marcos, Jr.

Having been to Israel recently, I noticed that the VAT refunds for foreign tourists who are about to leave the country is the norm.

To put things in perspective, posted below is an excerpt from the Manila Bulletin news article. Some parts in boldface…

The House of Representatives on Monday approved on third and final reading a bill granting Value Added Tax (VAT) refund for outbound tourists, a bill backed by President Ferdinand Marcos, Jr.

House Bill 7292 earned 304 “yes” votes, four “no” votes, and zero abstention.

Under the proposed measure, tourists will be eligible for a VAT refund on goods purchased from accredited retailers in the Philippines as long as such goods are taken out of the country within 60 days from the date of purchase and the value of goods purchased per transaction amounts to at least P3,000.

The bill also authorizes the Secretary of Finance to adjust the P3,000 threshold, taking into account the following indicators: administration costs in processing refunds; consumer price index; and other market conditions, upon the recommendation of the Secretary of Tourism and the Commissioner of Internal Revenue.

“This measure [is being passed] to adopt best practices in VAT refund schemes among Asia Pacific tourism destinations and expand the country’s competitiveness among its peers and neighboring countries,” the committee report on the measure read.

The bill defines a “tourist” as a foreign passport holder who is a non-resident individual not engaged in trade or business in the Philippines.

House ways and means panel chairperson Representative Joey Salceda earlier said the measure will generate P10 billion to P40 billion worth of increased sales for local suppliers.

Salceda was one of the principal authors of the measure, alongside House ways and means panel vice chairperson Mikaela Suansing of Nueva Ecija who chaired the technical working group drafting amendments to the original proposed bill.

“Generally, for every P1 refunded, the tourist spends an additional 1.5 pesos. That will create an additional twenty to eighty thousand jobs, and will also improve our gross international reserves,” Salceda said.

The above report ended stating that the newly approved measure was recommended to the Marcos administration by the Private Sector Advisory Council (PSAC), a group composed of business leaders and industry experts providing technical advice to the President. Take note that last year, the Philippines attracted over 2.6 million foreign tourists and generated P200 billion worth of tourism revenue.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think the newly approved measure will pass in the Philippine Senate soon? Do you think the measure will make the Philippines more competitive in international tourism?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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President Marcos says special powers not needed to curb inflation

March 7, 2023March 1, 2023carlocarrasco

In recent times, inflation has been strong in the Philippines and no less than the Bangko Sentral ng Pilipinas (BSP) confirmed this as it made its February 2023 inflation forecast. In relation to the high inflation, President Ferdinand “Bongbong” Marcos stressed that special powers are not needed to combat inflation, according to a news article by the Philippine News Agency (PNA).

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

There is no need to ask for special powers to ease inflation, President Ferdinand R. Marcos Jr. said Wednesday, noting that several interventions are already in place to manage the prices of basic commodities.

Marcos made the remark a day after the Bangko Sentral ng Pilipinas (BSP) reported that the country’s headline inflation could surpass the 9 percent level in February because of high prices of cooking gas and key food items.

“I do not think that it is necessary to ask for special powers,” he said in a chance interview on the sidelines of an event at the Rizal Park, when asked if he is considering asking Congress to grant him special powers to curb inflation.

“I already have the power to declare an emergency and to control the prices of commodities. So, I don’t think there’s any need for more than that. That is efficient,” he added.

On Tuesday, the BSP said the inflation rate in February may fall within the range of 8.5 to 9.3 percent, citing the upside risks from higher prices of cooking gas and food items such as pork, fish, egg, and sugar.

Despite the BSP’s latest forecast, Marcos remained bullish that consumer prices would go down, saying his administration is exhausting all efforts to boost the supply of agricultural products.

“The other elements of inflation hindi natin masyado ma-control, kaya meron tayong ginagawang ganito para makabawi naman doon sa pagtaas ng presyo (We could not control the other elements of inflation, that’s why we are making a way to address the rise in prices of basic commodities),” he said.

Several lawmakers, including House Speaker Martin Romualdez, have expressed openness to granting Marcos special powers to curtail inflation.

In January, inflation accelerated further to 8.7 percent from 8.1 percent posted in December 2022.

Let me end this piece by asking you readers: What is your reaction to this recent development? Are you confident that the national authorities have what it takes to ease inflation without granting the President special powers? Do you see the current inflation as a temporary problem or as a longer lasting problem?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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AIA Philippines’ investment management arm expresses optimism of robust growth of the Philippine economy

March 1, 2023February 24, 2023carlocarrasco

Recently, the investment management arm of AIA Philippines expressed confidence that the Philippine economy will continue to have robust growth in connection with what they claim to be an expanding manufacturing sector, according to news article published by the Philippine News Agency (PNA).

To put things in perspective, posted below is the excerpt from the PNA news report. Some parts in boldface…

An official of the investment management arm of AIA Philippines is optimistic on the robust growth of the domestic economy as the manufacturing sector continues to expand.

In a briefing on Thursday, AIA Investment Management and Trust Corporation Philippines (AIAIM Philippines) chief executive officer Angie Pacis said the country’s manufacturing sector is expected to continue posting expansion following the seven-month high manufacturing index in January 2023.

“Notwithstanding the slight weakening of the business confidence and consumer confidence, businesses will still be on a growth track,” she said.

The S&P Global Manufacturing Purchasing Managers Index (PMI) hit 53.5 in the first month this year. An index of 50 and above indicate expansion while those below 50 indicate contraction.

Pacis said forecasts point to continued 50-level index in the coming months.

Pacis also identified demographic dividends as among the factors that will help boost domestic growth this year given the large number of young people who are part of the workforce.

“It’s a young population, it’s a big population with a growing middle class that is actually becoming stronger. Because of that, we will continue to attract investments notwithstanding some of the structural problems,” she added.

These factors are seen to boost one-year-old AIAIM Philippine business, which currently offers three unit investment trust funds (UITFS) namely AIA Peso Adventurous Fund, AIA Peso Balanced Fund and AIA Peso Conservative Fund.

Pacis said the products they are offering are exclusively available for AIA Philippines policy holders for now, while the assets amounting to PHP155 billion they currently have will be handled purely without catering to outside investors.

Let me end this piece by asking you readers: What is your reaction to this new development? Were you able to understand the explanations from AIA Philippines investment management arm?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below and also please consider sharing this article to others. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. If you want to support my website, please consider making a donation. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram at https://www.instagram.com/authorcarlocarrasco/.

Oxford Economics says Philippine economic growth will slow down to 4.1% this year

February 28, 2023February 23, 2023carlocarrasco

For Oxford Economics, the economy of the Philippines will achieve continued growth in 2023 but with a notable slow down to 4.1%, according to a BusinessWorld news report. Oxford Economics mentioned in its statement factors like the global economy entering recession, inflation and the lack of impact from China’s reopening.

To put things in perspective, posted below is the excerpt from the BusinessWorld news article. Some parts in boldface…

PHILIPPINE ECONOMIC GROWTH is expected to slow to 4.1% this year, as external headwinds and elevated inflation are seen to dampen domestic demand, Oxford Economics said.

“After registering respectable growth of 7.6% in 2022, we expect the Philippines’ economy to slow to 4.1% amid global headwinds, elevated inflation, and a fading reopening boost. With monetary tightening set to continue, the economy could use a hand from the fiscal side, but chances are slim,” Makoto Tsuchiya, assistant economist at Oxford Economics, said in a research note released on Wednesday.

Oxford Economics’ gross domestic product (GDP) projection is well below the government’s 6-7% target.

It expects GDP to expand by 4.5% next year, still outside the 6.5-8% target set by the government.

“We expect GDP growth to slow materially amid softer external demand as the global economy enters a recession, led by weakness in major advanced economies. We don’t think China’s reopening will be enough to offset this weakness, with the recovery in private consumption there likely to be lackluster,” Mr. Tsuchiya said.

There is a widely anticipated global recession this year, with the World Bank projecting global growth to slow to 1.7%.

Rising inflation is also seen to “substantially” slow the Philippine economy, Mr. Tsuchiya said.

In January, inflation soared to a 14-year high of 8.7%, marking the 10th consecutive month inflation was above the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target range.

The central bank also raised its average inflation forecast to 6.1% this year from 4.5% previously.

Oxford Economics said that the BSP will continue to hike rates to tame inflation and keep in step with the US Federal Reserve.

“Elevated inflation means policy makers will not be able to react by lowering interest rates. Indeed, we expect tightening to continue for at least the next two meetings, albeit at a slower pace — in contrast to other Asian central banks who can afford to pause,” Mr. Tsuchiya said.

Oxford Economics also cited the lack of policy support as a factor contributing to slower growth this year.

“We think significant support is unlikely given limited policy space on both the monetary and fiscal front. Ideally, fiscal policy would take over the burden of supporting growth. But debt accumulated during the pandemic era means the focus is instead on fiscal consolidation,” Mr. Tsuchiya said, noting that the Philippine government may adopt a more restrained approach in spending.

Oxford Economics expects the budget deficit will reach 2.7% of GDP by 2028, better than the 3% projection given by the Development Budget Coordination Committee (DBCC).

The government projects the fiscal deficit to hit 6.9% of GDP or around P1.5 trillion this year. In the 11 months to November, the budget deficit shrank by 7.2% to P1.24 trillion.

However, Oxford Economics said the debt-to-GDP ratio may remain elevated at 61.1% by 2025. This is higher than the 60% target set by the government in the same period.

The country ended last year with a debt stock at 60.9%, better than the 63.7% seen in end-September but still above the 60% threshold considered manageable by multilateral lenders for developing economies.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think Oxford Economics’ prediction about 4.1% economic growth for the Philippines this year will turn out to be true? Do you think Oxford Economics made a strong case explaining why economic growth in 2023 will be smaller for the Philippines?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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