MANILA -- The World Bank on Monday retained its growth projection for the Philippines for 2023 despite a global economic downturn.
The country is still expected to be among the fastest-growing economies in the East Asia and Pacific region, according to the World Bank's October 2023 East Asia and Pacific Economic Update.
At an online media briefing, Aaditya Mattoo, World Bank Chief Economist for East Asia and Pacific, said the forecast for the Philippines' gross domestic product or GDP this year remains at 5.6 percent, the same growth estimate it had in April.
The growth forecast for the Philippines for 2024, meanwhile, has been slightly lowered from 5.9 percent to 5.8 percent.
“We expect economic activity to be supported by domestic demand, to be led by private consumption and decelerating inflation is good news,” he said.
However, the growth projection is lower than government target of between 6 and 7 percent.
Finance Secretary Benjamin Diokno has said the government might also revisit its growth targets this year.
Though the Philippines is expected to be among the fastest growing in the region, the country also faces risks due to external factors, the still-elevated prices of goods, and natural calamities like El Nino.
“The big concern has been slowing global growth, Philippines, like all the countries in the region, depends on the rest of the world for its exports of goods and especially services. Also, a lot of Filipinos work abroad and send remittances back,” said Mattoo.
China’s growth forecast was kept at 5.1 percent. Indonesia’s growth forecast grew from 4.9 percent to 5 percent, and Cambodia's growth outlook also climbed from 5.2 percent to 5.5 percent.
But the World Bank lowered its forecast for Vietnam from 6.3 percent to 4.7 percent.
The World Bank said weaker global demand, elevated debt, and a slowdown in China's economy pose risks to various economies in the region.
“High inflation in industrialized countries prompted them to increase interest rates and that affected the region and made it more expensive or people to borrow, to invest, or to consume,” Mattoo said.
The World Bank urges economies in the region, which are mostly manufacturing-driven, to be open to expanding their services sector, which has seen significant growth in recent years. He said a prime example would be the Philippines in this regard.
“Services account for at least half of employment and half of value added in most GDP economies… Services policy reforms, combined with the new digital revolution, are increasing productivity and changing the nature of jobs in a range of services,” he asserted.
For the entire East Asia and the Pacific region, the economic growth forecast was slightly lowered to 5 percent in 2023 from 5.1 percent in April. For 2024, the region is seen to grow by 4.5 percent.
Samoa is seen to grow by 6 percent while Fiji's economy is projected to expand by 7.7 percent, according to the report.