The ASEAN+3 Macroeconomic Research Office (AMRO) expects the Philippines to maintain its growth trajectory this year, bolstered by a significant decrease in inflation and its strong dependence on consumer spending.

Based on AMRO's latest ASEAN+3 Regional Economic Outlook (AREO) report released Tuesday, July 11, the regional think tank maintained its economic growth projection for the Philippines at 6.2 percent, along with an inflation projection of 5.9 percent for this year.

Furthermore, AMRO upheld its forecast for next year, with a gross domestic product (GDP) of 6.5 percent and an inflation outlook of 3.8 percent.

If AMRO's growth forecast is realized, the Philippines would emerge as the region's fastest-growing economy, outpacing all its ASEAN peers and even China this year, which is projected to grow by 5.5 percent.

In AMRO's previous forecast released in April, Vietnam was projected to grow by 6.8 percent. However, in its latest report, the regional think tank downgraded the country to 4.4 percent.

Vietnam faced the impact of a worldwide slowdown in the demand for its manufactured exports this year.

Hoe Ee Khor, AMRO chief economist, said the Philippines was well on track to maintain its growth for 2023 due to the distinct structure of its economy compared to its ASEAN neighbors.

Khor noted that the Philippine economy is predominantly service-oriented rather than reliant on manufacturing.

For this reason, he said the country is expected to experience further expansion, particularly in the services sector, following the conclusion of the Covid-19 pandemic.

The remittances from overseas Filipinos, accounting for 8.9 percent of the Philippine economy, are expected to drive consumer spending and boost household incomes this year.

Additionally, favorable consumer prices would also fuel growth.

The Philippines registered a significant drop in inflation last month to 5.4 percent, the lowest rate since June 2022. This decline also marks the fifth occurrence following its peak of 8.7 percent in January.

Meanwhile, AMRO said the ASEAN+3 region, comprising the 10 Southeast Asian member nations along with China, Japan, and South Korea, is projected to grow by 4.5 percent this year, surpassing last year's 3.2 percent.

Despite a slight adjustment in the ASEAN growth forecast for 2023 due to the ongoing weakness in global trade, which lowered it from April's projection of 4.9 percent, the Plus-3 economies are expected to contribute to improved prospects.

AMRO has also revised its inflation forecast for the region, excluding Lao PDR and Myanmar, to three percent for 2023, slightly lower than the previous projection of 3.4 percent.

Looking ahead, growth is projected to slightly ease to 4.5 percent in 2024, while inflation is expected to moderate further to 2.4 percent.