Economic Buzz: Philippines Faces Challenging Outlook For 2023 Says IMF

29 Nov 2022 , 12:56 PM

The Executive Board of the International Monetary Fund (IMF) concluded the 2022 Article IV consultation with the Philippines and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis. Following a sharp contraction in 2020, the Philippine economy rebounded in late 2021, growing by 5.7 percent. Growth accelerated further to 7.8 percent in the first half of 2022, spurred by strong domestic demand and private investment, as the Omicron wave proved to be less severe than anticipated and improved vaccination rates supported mobility. Both headline and core inflation increased in 2022—to 6.9 and 5.0 percent (year-on-year) respectively in September—surpassing the upper band of the government’s inflation target range of 2-4 percent. The current account swung from a surplus to a deficit in 2021, and the deficit has widened further in the first half of 2022, amid higher commodity prices, and the recovery in domestic demand. The banking system has shown resilience during the pandemic, emerging from the downturn with sufficient liquidity and capital buffers. The outlook for 2023 is more challenging due to unsettled conditions in major advanced economies, and real GDP is expected to slow from 6.5 percent in 2022 to 5 percent in 2023. Medium-term economic growth is forecast at about 6.3 percent. Inflation is expected to rise to 5.3 percent in 2022, then to decline modestly in 2023, supported by a moderation in commodity prices, and converge to the mid point of the band in 2024, as tighter monetary policy keeps inflation expectations anchored.Powered by Commodity Insights