The International Monetary Fund (IMF) may have drastically cut its growth forecast for the Philippines this year from 6.2 percent to 5.3 percent, but based on the October 2023 World Economic Outlook (WEO) report, the country will grow the fastest among ASEAN-5 neighbors.

In its global release on Tuesday, Oct. 10 of the WEO report while on an annual meeting with the World Bank in Marrakech, Morocco, the IMF noted that at 5.3 percent growth estimate for 2023 versus 7.6 percent in 2022, the Philippines will still fare better than other ASEAN-5 members -- Indonesia, Malaysia, Vietnam and Thailand. 

Comparatively, Indonesia is expected to grow by five percent this year from 5.3 percent in 2022, the second highest after the Philippines.

Meanwhile, Vietnam, considered the Philippines’ closest competitor, is projected to have a gross domestic product (GDP) growth of 4.7 percent from eight percent in 2022. The economies of Malaysia and Thailand are estimated to expand by four percent and 2.7 percent, respectively, in 2023, compared with their 2022 growth of 8.7 percent 2.6 percent.

For 2024, the IMF forecasts 5.9 percent GDP growth for the Philippines, still ahead of the five percent for Indonesia, 4.3 percent for Malaysia and 3.2 percent for Thailand.

In the latest WEO, the IMF in general projects that Asia as a region will register 4.6 percent GDP growth this year, up from 3.9 percent in 2022. Next year, the region is estimated to grow by 4.2 percent.

Advanced Asia which includes Japan, Korea, Taiwan, Australia, Hong Kong, New Zealand and Macao is expected to grow by 2.1 percent from 1.8 percent last year. In 2024, it is projected to slow down to 1.8 percent.

The Philippines is part of the grouping “Emerging and Developing Asia” which also includes – besides ASEAN-5 – the countries of China and India. This group’s combined GDP is expected to grow by 5.2 percent this year from 4.5 percent in 2022. For 2024, the growth will slow to 4.8 percent.

The IMF forecasts global growth to slow down to three percent in 2023 from 3.5 percent. For next year, global growth is estimated at 2.9 percent.

The outlook for global growth is “stable but slow”. The IMF noted “more sizable changes in the underlying growth trajectories of major economies, with stronger projections for the United States and downward revisions for China and the euro area.”

The IMF said the forecasts are slower than 2020 to 2022 and are also below the historical annual average of 3.8 percent which was from 2000 until 2019 before the pandemic. Growth is also below the historical average across broad income groups, both in overall GDP as well as in per capita GDP, it noted.

“The latest projections confirm that the global economy is slowing as inflation declines from last year’s multidecade peak. A contraction in global per capita real GDP—which often happens in a global recession—is not part of the baseline scenario. Growth and employment in the first half of the year remained more resilient than forecast in the April 2023 WEO,” according to the IMF.

The IMF also noted that the “medium-term prospects for economic growth remain the lowest in decades, with middle- and lower-income countries facing a slower pace of convergence toward higher living standards.”

It added that the latest global growth forecasts are “predicated on a number of assumptions … notably for fuel and nonfuel commodity prices, as well as the stances of monetary and fiscal policy.”

Last Oct. 3, at the conclusion of the IMF Article IV Consultation Mission 2023 for the Philippines, IMF Mission Head Jayanath Peiris and IMF Resident Representative Ragnar Gudmundsson disclosed the latest GDP forecasts for the country.

The IMF officials said the weak global economy and tightened policy settings will continue to slow GDP growth this year and in 2023 but could expect some recovery next year, given the government’s pronouncements that it will accelerate public spending.

Both growth projections for 2023 and 2024 are below the government’s GDP growth targets of six to seven percent for 2023 and at least eight percent for 2024.

The IMF officials noted that the main downside risks to the Philippine GDP outlook remains the high global and local inflation which could “necessitate a further tightening of monetary policy”.

The IMF forecasts the country’s inflation will settle at 5.8 percent for this year which was the same as last year, while they expect inflation will drop to 3.2 percent in 2024.

The IMF inflation forecasts is the same as the Bangko Sentral ng Pilipinas for 2023 which was also 5.8 percent. For next year, the BSP sees higher growth at 3.5 percent.

The IMF-World Bank has on ongoing annual meeting from Oct. 9 until 15 in Morocco.