AMRO trims PH growth forecast for 2023 amid local, global headwinds

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Metro Manila (CNN Philippines, October 6) — The Philippine economy could expand at a milder pace in 2023 as it weathers heightened challenges here and abroad, a regional macroeconomic surveillance organization said Thursday.

In its latest regional economic outlook quarterly update, the ASEAN+3 Macroeconomic Research Office (AMRO) downgraded its growth forecast for the country next year to 6.3%, from its 6.5% estimate in July.

The latest forecast is slower than AMRO's 6.9% projection for this year, which the organization kept from July. It is also below the 6.5-8% target band set by President Ferdinand "Bongbong" Marcos Jr.'s economic team for 2023.

"We expect growth to taper off because of the low base effect. Given the stronger headwind, you'd be slightly below potential," said AMRO chief economist Hoe Ee Khor in a press briefing.

Khor likewise flagged the United States' possible slowdown which could affect the overseas Filipino remittances, along with the rising Philippine inflation.

AMRO also updated its inflation expectations for the country in its report. From 4.4% this year and 3.8% in 2023, it now projects full-year rates of 5.1% for 2022 and 4% next year.

"The inflation rate in the Philippines is quite high, although we think it will peak this month or next month and begin to come off. But it's tempering demand in the Philippines as well," said Khor.

The Philippine Statistics Authority reported that prices of basic goods rose by 6.9% in September, exceeding 6.3% in August.

September's rate brought the average inflation this year to 5.1%, further above the Bangko Sentral ng Pilipinas' 2-4% target band.

AMRO also raised its inflation forecasts for the Association of Southeast Asian Nations (ASEAN) this year and in 2023. It now sees annual averages of 7.6% and 4%, from its previous 6.2% and 3.% projection.

For ASEAN+3, which refers to ASEAN-member nations plus China, Japan, and South Korea, the organization also expects inflation to quicken to 6.2% in 2022 and 3.4% next year. Its prior forecasts were 5.3% and 2.8% for this year and 2023, respectively.

Despite the projection downgrade, the Philippines' estimated growth for 2023 is the second fastest in ASEAN+3, next to Vietnam, which still has a growth forecast of 6.5%.

While AMRO hiked its 2022 growth forecast for ASEAN to 5.3%, from 5.1% previously, it trimmed its estimate for the region next year to 4.9%, down from 5.2%.

AMRO slashed both its 2022 and 2023 growth projections for ASEAN+3, as follows:

- 2022: 3.7% (from 4.3%)

- 2023: 4.6% (from 4.9%)

It cited China's "strict dynamic" zero-COVID policy and real estate sector weakness, along with potential recessions in the United States and the euro area, for the downgrade.