Manila-based Asian Development Bank (ADB) has maintained its growth projections for the Philippines this year of 5.7 percent and 6.2 percent for 2024, based on its latest Asian Development Outlook (ADO) for December 2023.
The growth projections are the same as in the September 2023 ADO report. The latest ADO report was released on Wednesday, Dec. 13.
Meanwhile, ADB revised its growth outlook for developing economies in Asia and the Pacific and it now expects the regional economy to grow by 4.9 percent this year versus its earlier forecast of 4.7 percent in the September ADO.
For 2024, it retained the previous 4.8 percent projection for regional growth.
However the growth forecasts for Southeast Asia have been revised lower to 4.3 percent for 2023 and 4.7 percent for 2024 due to weak external demand, according to the report. The previous estimate was 4.6 percent for 2023 and 4.8 percent in 2024.
Among Southeast Asian nations, the Philippines has the highest growth forecast at 5.7 percent for 2023, followed by: Vietnam with 5.2 percent; Indonesia with five percent; Malaysia with 4.2 percent; Thailand with 2.5 percent; and Singapore with one percent.
ADB cited the strong domestic demand in major Asian economies such as China and India as drivers for the next years’ regional growth.
The Chinese economy it expects will grow by 5.2 percent this year, higher than its previous forecast of 4.9 percent amid its high third quarter growth due to expansion of household consumption and public investments.
ADB said India’s growth outlook is also adjusted higher to 6.7 percent from 6.3 percent due to its double-digit growth.
The multilateral agency said “the upgrades for the PRC (Peoples Republic of China) and India more than offset a lowering of the forecast for Southeast Asia, caused by lackluster performance in the manufacturing sector.”
“Developing Asia continues to grow at a robust pace, despite a challenging global environment,” said ADB Chief Economist Albert Park in the report.
He added that “inflation in the region is also gradually coming under control (but) still, risks remain, from elevated global interest rates to climate events such as El Niño.”
Park noted that governments in Asia and the Pacific “need to remain vigilant to ensure that their economies are resilient, and that growth is sustainable.”
The latest ADO highlighted Developing Asia’s outlook which “remains solid despite global challenges” on robust domestic demand.
ADB also revised East Asia’s growth forecast higher for 2023 to 4.7 percent (from 4.4 percent) and 4.2 percent for 2024, while South Asia is now expected to grow by 5.7 percent (from 5.4 percent) this year and six percent in 2024.
For other areas, the ADB forecasts the Caucasus and Central Asia to grow by 4.8 percent this year and 4.6 percent in 2024, while the Pacific’s growth projections are unchanged at 3.5 percent for 2023 and 2.9 percent for 2024.
ADB said in September that for the Philippines, downside risks to the outlook are likely to come from global headwinds such as geopolitical tensions and a sharper-than-expected slowdown in major advanced economies.”
For next year, ADB expects economic activity in the country to perk up as price pressures decelerate on the back of household consumption and infrastructure as well as as social services’ public spending.
ADB’s growth projections for 2023 of 5.7 percent is lower than the government’s target of six percent to seven percent. Its 2024 growth estimate is also below the state’s target of 6.5 percent to eight percent.
Meanwhile, the multilateral agency’s inflation forecasts for the Philippines is also maintained at 6.2 percent for 2023 and four percent for 2024. Both projections are higher compared to Bangko Sentral ng Pilipinas’ (BSP) own forecast of 5.6 percent for 2023 and 3.4 percent in 2024.
ADB said inflation risks include: possible severe weather disturbances including the El Niño dry weather phenomenon; pressures from elevated global commodity prices; and second round effects from higher transport fares and minimum wage hikes could slow the pace of inflation easing.