As the world teeters on the brink of another recession, the Department of Finance (DOF) assured that the Philippine would weather the looming sharp contraction in global economic output next year.
Finance Secretary Benjamin E. Diokno said the Philippines has the adequate buffers against external headwinds due to sustained rise in world inflation, particularly from higher global oil prices.
Diokno said the country has a hefty level of gross international reserves at $95.1 billion as of November 2022, enough to cover 7.5 months’ worth of imports of goods and payments of services and primary income.
He also said the country’s outstanding foreign debt, reckoned in relation to the size of the domestic economy, decreased in the second quarter to 26.8 percent from 27.5 percent in the previous quarter.
Moreover, the nation has a favorable external debt profile, Diokno said.
By maturity, it is 15.2 percent short-term, 84.8 percent medium and long term; by borrower, 40 percent private sector, 60 percent public sector; and by interest type, 56.7 percent fixed rate, 42.4 percent variable type, and 0.9 percent non-interest bearing.
“In addition, the country has a steady supply of foreign exchange from overseas Filipino remittances, export revenues from Business Process Outsourcing firms, tourism receipts, and inflows from foreign direct investments,” the finance chief said.
Cash remittances increased by 3.1 percent year on year in the first 10-months of the year to $26.736 billion.
On Dec. 14, the Asian Development Bank (ADB) slightly lowered its growth forecast for developing Asia for 2023 amid global financial tightening, the prolonged Russia-Ukraine conflict, and slower global expansion.
The Manila-based lender now expects its GDP projection for developing Asia to 4.2 percent from its 4.3 percent outlook in September.
For the Philippines, the bank slashed its its growth projection from 6.3 percent to 6.0 percent in 2023.
“Many institutions and experts have predicted a global recession in 2023, and consequently, downgraded Philippine GDP growth outlook to less than six percent,” Diokno said.
The inter-agency Development Budget Coordination Committee (DBCC) predicts that the economy will grow by 6.0 percent to 7.0 percent in 2023 in the face of external headwinds.
“But an average GDP growth of 6.5 percent is nothing to be sneezed at: it is still one of the highest, if not the highest, growth rates among ASEAN+6 economies,” he said.