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The Philippine growth forecast has been lowered to 5.7% by ADB.


The ADB lowered its projection for the Philippines’ GDP growth in 2021 due to increased concerns about the economy.fl

The action of dampening consumer spending.

The ADB’s most recent Development Outlook report has revised its GDP growth forecast for this year from 6% to 5.7%, as stated in their April projection.

If achieved, this would fall short of the government’s goal of 6-7% for the current year and would be slower than the 7.6% increase in GDP in 2022.

ADB trims 2023 Philippine GDP growth outlook to 5.7%; inflation steady at 6.2%

Dulce Zara, ADB’s Senior Regional Cooperation Officer for Southeast Asia, stated in a webinar on Wednesday that our prediction for Philippine growth this year has been lowered primarily because of the decline in domestic demand.

She noted last year’s economic performance refl

The economy’s reopening, high demand, and expenditures related to the election were all influential factors.

Last year, there was a high level of spending and investments. However, this year, they have decreased. In addition, exports have also decreased, which has led to the downgrading.

From April to June, the Philippine economy grew by 4.3%, marking the slowest rate of growth in more than two years. This was due to a decline in household consumption and reduced government spending.

The Philippines has the second highest growth forecast among Southeast Asian countries for 2023 according to the ADB, behind Vietnam (5.8%) and ahead of Cambodia (5.3%), Indonesia (5%), and Malaysia (4.5%).

This is also greater than the projected GDP growth of 4.6% for Southeast Asia, which was slightly lower than the previous estimate of 4.7%.

According to ADB Philippines Country Director Pavit Ramachandran, the Philippines’ economic progress continues to be robust, even though it is expected to slow down in 2023. The growth will be supported by both public investment and private spending, driven by low unemployment rates, a consistent rise in remittances from overseas Filipinos, and a thriving services sector including tourism.

In 2024, the ADB predicts that the Philippines will have the highest economic growth rate in Southeast Asia at 6.2% GDP. This change comes after the ADB lowered its previous growth estimate for Vietnam from 6.8% to 6%.

Private spending and investments will remain the driving force behind economic growth. There will be a decrease in the rate of increase of… fl

The prediction of stable prices in the upcoming year is positive for national consumption, according to the international lending institution.

In 2024, there is anticipation for an increase in public spending and investment in infrastructure.

In the future, the outlook for the Philippines is optimistic. Ms. Zara mentioned that there are potential investments from the government due to their planned infrastructure projects, as well as sustained consumer spending, which is the primary factor driving growth in the Philippines.

The Asian Development Bank (ADB) mentioned a number of potential threats to the projected growth of the Philippines, including a projected decrease in the economies of major countries, increasing political tensions, and high prices of global commodities.

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A heightened and prolonged El Niño event, along with other severe weather disruptions, and the ongoing Russian incursion into Ukraine may result in an escalation of the situation.fl

The statement mentioned rising costs and inflationary pressures.

ELEVATED INFLATION

ADB continued to retain its position at the same time.fl

The projected inflation rate for this year is 6.2% and for next year it is 4%, both falling within the Bangko Sentral ng Pilipinas’ annual target range of 2-4%.

its latest survey

The BSP’s latest survey shows that both predictions are higher than their average. fl

The estimated growth rates for this year and 2024 are 5.6% and 3.3%, respectively.

At 6.2%, Philippine infl
The prediction is that this year, the rate of growth in Southeast Asia will rank third, after Laos (28%) and Myanmar (14%).

In 2024, the Philippines is projected to continue experiencing the third-highest rate of inflation, following Cambodia and Vietnam.

“Infl

The ADB stated that there is an anticipation for a decrease in inflation, but the arrival of El Niño and higher international commodity costs may hinder the rate of deceleration.

The international organization stated that the El Niño weather pattern is expected to negatively impact the upcoming crop production, specifically in Southeast Asia.

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According to the statement, there is an increase in net rice imports in countries such as Bangladesh, Bhutan, Maldives, Nepal, and the Philippines.

According to Ms. Zara, the agriculture output of countries such as the Philippines, Indonesia, Myanmar, and Thailand may face significant effects from dry spells and droughts caused by El Niño.

“Although infl

There has been a decrease in activity during the initial seven months of the year, particularly in the food industry.fl

The percentage of inflation remains high at over 5% for Laos, the Philippines, Singapore, and Malaysia. According to her, the decrease in agricultural production, both domestically and globally, will have negative consequences for these economies.

Additionally, the Philippines may also experience secondary effects resulting from increased transportation costs and changes in wages.flation this year.

The government is contemplating prolonging the duration of the discounted fees.ff

“The expiration date for certain food items, such as rice, is December 2023. Please store them accordingly.”fl

The ADB stated that it contained information.

The ADB predicts that the BSP will maintain current policy rates in light of decreasing core inflation and may only consider lowering them in 2024.

The central bank raised the main interest rate by 425 basis points to 6.25% between May 2022 and March 2023.

According to a recent BusinessWorld poll, 14 out of 17 analysts predict that the Monetary Board will maintain interest rates for the fourth consecutive meeting on Thursday.

SLOWER GROWTH

The Asian Development Bank (ADB) stated that economic growth in developing countries in Asia is predicted to be slightly lower this year than previously anticipated. This is due to the decline in China’s real estate market and potential risks associated with El Niño, which could impact the region’s overall outlook.

The ADB revised its forecast for developing Asia’s economic outlook, lowering the projected growth for 2023 from 4.8% to 4.7% compared to the previous forecast announced in July.

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The percentage for country C, not including Japan, Australia, and New Zealand, has been adjusted slightly higher to 4.8% from the previous 4.7%.

Mr. Park stated that the region is experiencing strong economic growth due to robust domestic spending and investments, despite a decline in external demand that is hindering export-led growth.

The ADB adjusted its predictions for economic growth in East Asia, South Asia, and Southeast Asia for this year. China and India are expected to see growth rates of 4.9% and 6.3%, respectively, which is slightly lower than the earlier forecasts of 5% and 6.4% made in July.

The ADB’s report stated that the property crisis in China could potentially hinder regional growth and presents a negative risk.

The lender headquartered in Manila kept its projections for China and India’s growth in 2024 unchanged at 4.5% and 6.7% respectively.

line with our projections, there are signs that the economy may be slowing down.

Although the economy has been strong and consistent with our estimations, there are indications that it may be experiencing a deceleration.fl
According to Mr. Park, the pressure of inflation is decreasing in developing Asian countries. However, he warns that governments must remain cautious and attentive to the various issues that the region is currently facing, such as food security.

Infl

Economic growth in developing countries in Asia is expected to decrease to 3.6% this year compared to 4.4% last year, and is projected to further slow down to 3.5% by 2024. This will allow central banks to have more flexibility in their policies. However, the ADB notes that the trajectory of interest rate hikes and easing may vary in the future. This information was reported by Luisa Maria Jacinta C. Jocson with contributions from Reuters.