MANILA, Philippines – Multilateral lender Asian Development Bank (ADB) raised its gross domestic product (GDP) growth outlook for the Philippines to 7.4% in 2022, higher than the previous forecast of 6.5%.

ADB cited the stronger-than-expected domestic demand spurred by rising employment and recovery in tourism as among the factors in raising its outlook.

The Philippines will be at the high end of the range compared to other countries in Southeast Asia, which is expected to collectively grow at 5.5% – higher than the previous forecast of 5.1%.

“The Philippine economy has shown strong underlying growth momentum and resilience in 2022 and this is expected to continue in 2023, with GDP growth converging towards its longer term growth rate of about 6%,” said ADB Philippines country director Kelly Bird.

The Philippines’ GDP grew 7.6% in the 3rd quarter, higher than consensus estimate of just 6.1%. GDP grew at 7.5% and 8.2% in the first and second quarters, respectively.

2023 headwinds

While the Philippines is expected to grow faster than previously thought in 2022, 2023 will be a different story due to headwinds.

For 2023, the ADB forecasted a slowdown of 6%, lower than the earlier projection of 6.3%.

“There are downside risks to growth in 2023, including inflation stickiness, further increases in interest rates, and a sharper than expected slowdown in GDP growth in advanced countries,” Bird said.

The rest of Southeast Asia are also expected to feel the pinch, with GDP growth expected to slow down to 4.7% in 2023.

“Upward pressures on commodity prices, including oil which will weigh heavily on the predominantly oil-importing Philippines, are expected to be sustained in 2023 with continued uncertainty arising from the Russian invasion of Ukraine,” ADB said. –Rappler.com