MANILA -- Philippine economic growth is expected to settle at a moderately slower 5.9 percent in 2023, the ASEAN+3 Macroeconomic Research Office (AMRO) said Tuesday.

This was slower than the 6.2 percent growth that AMRO forecast in July, which was then the fastest for Southeast Asia.

• PH to post fastest growth in ASEAN in 2023: research org

The slower growth is because of high base effects and weaker external demand, AMRO Principal Economist Runchana Pongsaparn said.

He noted, however, that growth may speed up again to 6.5 percent in 2024 as global demand recovers.

Philippine economic managers still hope the economy will grow by 6 to 7 percent this year. Gross domestic product expanded 4.3 percent from April to June, which was slower than the 6.4 percent growth in the first quarter.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan had said that to achieve the 6 to 7 percent growth target for 2023, the economy should grow at least 6.6 percent in the second half of the year.

Headline inflation, meanwhile, may temper to 5.5 percent in 2023 from 5.8 percent in 2022, according to AMRO.

The regional research group said the inflation may slow further to 3.8 percent in 2024.

The government hopes inflation will settle to its target range of 2 to 4 percent by the end of the year. It quickened to 5.3 percent in August after slowing for six straight months.

• Inflation quickens to 5.3 pct in August as rice, fuel costs rise

AMRO said inflation will likely remain elevated due to a positive output gap and the second-round effects of minimum wage increases in the minimum and expectations of persistently high inflation.

It noted, however, that domestic demand may remain robust on the back of improvements in labor market conditions, robust overseas remittances, and higher government infrastructure spending.

The think-tank said inflation caused by supply problems in the food sector continues to pose a risk to the Philippine economy.

Slower growth among the country's major trading partners, volatility in the global financial market, and tighter financial conditions also pose risks, AMRO said.

"The long-term growth potential is largely affected by the scarring effects of the pandemic, the pace of infrastructure development, geopolitical risks, and the economic losses from natural disasters, which are being exacerbated by climate change," they added.

AMRO said tightened monetary policy and a contractionary fiscal stance will help the Philippines amid a positive output gap and persistent inflationary pressures.

"In the medium to long term, fiscal policy should balance between restoring fiscal buffer and supporting sustainable growth and development," the research organization said.

They also called on regulators to work together in identifying, monitoring and mitigating financial stability risks.

"Meanwhile, the authorities should continue to improve the liquidity management framework, develop the bond and repo markets, and continue to expand financial inclusion, to enhance the system’s resilience to shocks and promote market activities," researchers said.

AMRO also said a comprehensive approach is needed to boost the Philippines' medium to long term growth potential.

"Overcoming the scarring effects of the pandemic mandates a sustained focus on upgrading and upskilling the workforce to embrace a more technology-driven economy," they said.

They also called on the government to boost policies to attract investments and promote trade.

"Furthermore, the government can enhance the country’s competitiveness through infrastructure investment, digitalization, and developing a green economy."

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