MANILA - The Philippine economy could grow 6.9 percent this year, but would post a slower growth of 6.3 percent in 2023, the ASEAN+3 Macroeconomic Research Office (AMRO) said on Thursday.
The new 2023 forecast is lower than an earlier estimate of 6.5 percent growth, AMRO said, due to global headwinds such as the slowdown of the US economy, the possible recession in Europe and the peso depreciation against the US dollar.
"Given the stronger headwind, you'd be slightly below potential," AMRO Chief Economist Hoe Ee Khor said.
AMRO also raised its inflation outlook in 2022 to an average of 5.1 percent, up from the previous forecast of 4.4 percent. In 2023, inflation could settle at 4 from the previous forecast of 3.8 percent, AMRO said.
Inflation in September quickened to 6.9 percent, way above the government's 2 to 4 percent target.
"The inflation rate in [the] Philippines is quite high, though we think it will peak this or next month and begin to come off," Khor said.
AMRO also lowered its economic growth outlook for the ASEAN+3 in 2022 to 3.7 percent from a previous forecast of 4.3 percent.
The region's inflation, meanwhile, is projected to average 6.2 percent for the year.
COVID-19 remains a risk to growth, while perennial risks include natural disasters, cyberattacks, and climate change transition, the group said.
The slowdown in the Chinese economy is also expected to affect the ASEAN+3 region. The sharper-than-expected slowdown according to Khor is fueled by a slowing real estate sector.
All ASEAN+3 currencies depreciated as the US and Europe weakened. The Philippine peso had the fourth highest depreciation behind the Japanese Yen, the Thai Baht, and the Korean Won.
"[The Philippine peso] is depreciating in line with other countries in the region. it's not excessive in a sense. It's actually good in the Philippines, because it's attracting more remittances," Khor said.
The peso closed at a record low of P59 on Oct. 3.
However, the rising inflation coupled with the weakening peso against the dollar has prompted the Bangko Sentral ng Pilipinas to implement successive interest rate hikes, which pushed the country's key policy rate to the second highest in the region next to Indonesia, AMRO said.
The benchmark interest rate is currently at 4.25 percent.