MANILA - The Asian Development Bank on Wednesday said it has lowered the outlook for developing Asia due to lingering risks while the forecasts for the Philippines and Southeast Asia were raised due to the "surprisingly robust" performance of select countries.
For 2022, the growth forecast for the Philippines was revised upwards to 7.4 percent in December from the 6.5 percent projection in September, according to the updated Asian Development Outlook (ADO) 2022.
"The 2022 growth forecast for the Philippines is revised up after domestic demand spurred Q3 growth above expectations," the Manila-based multilateral lender said.
“The Philippine economy has shown strong underlying growth momentum and resilience in 2022 and this is expected to continue in 2023, with GDP growth converging towards its longer-term growth rate of about 6 percent,” said ADB Philippines Country Director Kelly Bird.
The Philippines' 7.7 percent gross domestic product growth (GDP) in the first 3 quarters was driven by robust private consumption and investment as well as sustained public infrastructure spending. Employment, tourism, production, retail sales and public investments, which have shown improvements, will continue to support growth, it said.
Economic managers have said that the Philippines is poised to meet its growth target of between 6.5 to 7.5 percent for the year given the robust growth in the previous quarters.
For 2023, the outlook was lowered to 6 percent from 6.3 percent "to accommodate monetary tightening, a sharper growth slowdown in the advanced economies, and continuing uncertainty arising from the Russian invasion of Ukraine," the ADB said.
GLOBAL HEADWINDS' IMPACT ON DEVELOPING ASIA
Meanwhile, the GDP growth outlook for developing Asia was lowered to 4.2 percent from 4.3 percent due to "worsening" global headwinds including the recurrent COVID-19 lockdowns in China, Russia's invasion of Ukraine and slower global growth, the ADB said.
For 2023, developing Asia's GDP is expected to expand by 4.6 percent instead of the previous forecast of 4.9 percent, it added.
But the GDP growth forecast for Southeast Asia in 2022 was revised higher to 5.5 percent buoyed by forecasts for Malaysia, Thailand, Timor-Leste, Vietnam and the Philippines after robust growth in the third quarter, according to the ADB report.
"Stronger consumption, exports, and services, particularly for tourism, lifted growth forecasts for these economies," it said.
However, growth rates are unlikely to be maintained for the said nations in 2023 due to the potential impact of inflation, rising interest rate and constrained public finances curtailing government spending, the bank said.
The ADB said its regional inflation forecasts were slightly lowered for 2022 to 4.4 percent from 4.5 percent. Inflation was, however, seen to be elevated in 2023 to 4.2 percent from 4 percent, it said.
Inflation in the Philippines was revised higher to 5.7 percent from 5.3 percent due to higher food prices, the ADB said. The forecast for 2023 was kept at 4.3 percent.
Inflation reached 8 percent in November, which was double to upper limit of the government's 2 to 4 percent target and is the highest rate since November 2008, government data showed.
Many central banks globally have raised key interest rates to temper inflation. The Philippines raised its overnight borrowing rate by a cumulative 300 basis points this year to 5 percent as inflation accelerated and as the peso weakens against the strong US dollar.
Another interest rate hike is widely expected to be announced this month before the year ends but at a lower tranche as the US Federal Reserve signals a slower rate increase in December.