MANILA - The Philippine economy is expected to grow moderately at 6 percent in 2023 despite elevated inflation, which is slower than the above-target outturn in 2022, the Asian Development Bank said on Tuesday.
Recovery in retail trade, expansion in the manufacturing sector and public infrastructure spending are likely to support the growth, according to the Asian Development Outlook report released by ADB.
However, the looming slowdown in major economies, heightened political tensions and sticky inflation remain as risks to the gross domestic product (GDP) growth, the report said.
The country's GDP is seen to grow further to 6.2 percent in 2024, the Manila-based multilateral lender said.
"The Philippines will grow at its potential this year and next and is on track toward its goal to become an upper middle-income country,” said ADB Philippines Country Director Kelly Bird.
Economic managers have said the Philippines could become an upper-middle-income country by 2024. The feat could have been achieved earlier if there was no disruption brought by the COVID-19 pandemic, the government had said.
Inflation, meanwhile, is expected to remain high at 6.2 percent in 2023 before easing to 4 percent average by 2024, the ADB said. This is in line with the Bangko Sentral ng Pilipinas' estimate of 6 percent average this year and below the 2 to 4 percent target in 2024.
Both the ADB and the BSP expect inflation to start easing in the second half of 2022 as monetary policy tightening takes effect and as global commodity prices ease.
The BSP earlier raised the benchmark interest rate to 6.25 percent as inflation remain above target in February at 8.6 percent.
The multilateral lender also noted the country's gains in poverty reduction, employment and other fiscal improvements such as the expected narrowing of its current account deficit due to strong exports, business process outsourcing receipts as well as OFW remittances, among others.
However, the ADB pointed out that the country must address climate change challenges as well as risks to food security.