MANILA — The International Monetary Fund on Friday said it raised the 2023 economic growth outlook for the Philippines due to the stronger-than-expected first quarter expansion as well as the positive indicators for the rest of the year.

The IMF expected the Philippines' gross domestic product (GDP) to expand by 6.2 percent this year from its earlier projection of 6 percent.

The Philippines posted a 6.4 percent growth in Q1.

"The IMF has adjusted up its growth projection for the Philippines from 6.0 percent to 6.2 percent for 2023. Stronger-than-expected first quarter data and leading indicators for Q2 has shown demand and growth dynamics remaining strong in 2023," IMF Mission Chief for Philippines Jay Peiris told ABS-CBN News.

MIF also cited the Bangko Sentral ng Pilipinas' "decisive" action to tighten rates in order to reduce inflation.

Inflation reached a 14-year high of 8.7 percent in January. It has since eased to 5.4 percent in June but it remains above the government target of 2 to 4 percent.

The BSP in June, meanwhile, kept the interest rate at 6.25 percent as inflation decelerated.

Inflation is seen to moderate to 5.6 percent on average this year, the IMF said.

"The BSP has acted decisively to tighten rates and reduce inflation, and we see the impact of tightening bringing inflation back to within target around 3 percent by early next year," Peiries said.

But upside risks for inflation could stem from El Niño as well as the volatility in global commodities, he said.

• BSP keeps interest rate steady at 6.25 percent

Peiris said the BSP's "tighter for longer" stance was crucial for both domestic and global perspective.

"This will also safeguard against potential capital outflows, which is still a relevant concern. Keeping this stance is also important to guard against the risk of excessively fast currency exchange rate depreciation," Peiris said.

However, growth may be slightly lower next year due to the impact of monetary tightening and possible slowdown in growth in advanced economies, he said.

The government expects the economy to grow by 6 to 7 percent this year.

• DBCC keeps 6 to 7 pct 2023 growth target; sees higher inflation

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