Philippine economy seen to grow 6.2 percent in 2023: Citi economist

Jessica Fenol, ABS-CBN News

Posted at Feb 01 2023 03:04 PM

MANILA - The Philippine economy is expected to continue posting robust growth in 2023 but slower than the above-target expansion last year, an economist said on Wednesday.

In 2023, the country's gross domestic product (GDP) could expand by 6.2 percent, from 7.6 percent last year, Citi Economist for Thailand and the Philippines Nalin Chutchotitham told reporters in a briefing.

"We do expect some slowdown in growth this year coming down to probably about 6.2 percent down from last year's very strong growth of 7.6 given higher financing costs and also some expectations of global slowdown," Chutchotitham said. 

Household spending supported by strong employment, the young and growing population supporting spending, and the expected easing in inflation, among others, are seen to drive the continued recovery this year, she said.

Other potential growth drivers are tourism, remittances, investments and public spending.

"I think [there's] still strong sentiment overall. We do think that some of those investment momentum will also continue to expand this year too and not to mention as well the infrastructure investment of the government that's still in the pipeline that will help to also keep the momentum going as well," she added.


The Bangko Sentral ng Pilipinas, meanwhile, is expected to raise interest rates by 50 basis points to 6 percent in the first half to anchor inflation, the economist said.

She said inflation is expected to remain high at 5.3 percent before reverting to target next year. On a monthly basis, inflation is seen to go down to between 2 to 4 percent by October this year.

The central bank earlier raised the benchmark interest rate to 5.5 percent to cool down inflation that reached 18-year highs. Inflation in December hit 8.1 percent, the highest since November 2008.

"I think inflation is still pretty much on the minds of the BSP even though we think that the jumbo hike is not going to be needed anymore. Now that the BSP has front-loaded a lot of the rate hikes last year," she said.

“The quick and decisive action taken by our central bank has proven to be beneficial to the local markets. As evidenced by the stronger currency and flattening of the yield curve, the markets are taking comfort that the trajectory ahead is one of more stability and clarity," Citi Philippines Markets Head and Country Treasurer Paul Favila said.

By 2024, the BSP may start reducing interest rates, Chutchotitham said.

Uncertainties in electricity fair, high vegetable prices and other food costs, however, may be risks to the inflation outlook this year, she said.


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