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Philippines Economic Updates Share more World Bank Philippines Economic Update June 2023 Securing a Clean Energy Future The Philippines Economic Update is biannual publication of the World Bank. It summarizes key economic and social developments, important policy changes, and the evolution of external/global conditions. World Bank Philippines Economic Update June 2023 Securing a Clean Energy Future June 2023: Securing a Clean Energy Future Improving the efficiency of social protection in the Philippines remains essential to protect the poor and most vulnerable from economic shocks as the country grapples with global uncertainties and domestic risks including high inflation.

Bucking global trends, strong domestic demand in the Philippines is expected to propel its economy to a 6.0 percent growth in 2023 and 5.9 percent the following year. Strong domestic demand is underpinned by consumer spending drawing strength from the continuing jobs recovery and the steady flow of remittances. Fixed capital investment will also contribute to growth, anchored on upbeat domestic activity, and improved business confidence.

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World Bank Philippines Economic Update December 2022 Bracing for Headwinds, Advancing Food Security December 2022: Bracing for headwinds, Advancing Food Security The December 2022 edition of the PEU includes a special focus on the topic of Public Expenditure Review for Agriculture and lays out the importance of improving the effectiveness of public spending in the sector. It also looks into the financial and functional devolution resulting from the Mandanas ruling and the challenges and policy recommendations toward achieving the medium to long term agenda of agriculture productivity and food security.

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World Bank Philippines Economic Update June 2022 Cover June 2022: Strengthening the Digital Economy to Boost Domestic Recorvery Anchored on more robust domestic activities, the Philippines is poised to grow 5.7 percent in 2022 and 5.6 percent on average in 2023-24 amidst intensifying global uncertainties. Continuity of policies supporting growth and investments are key to strengthening recovery in the Philippines.

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The World Bank December 2021 Regaining Lost Ground, Revitalizing the Filipino Workforce From the deep economic contraction last year, the Philippines is on the path to economic recovery. There are clear signs of rebounds in domestic activity, community mobility, industrial output, and recently with bank lending activities. However, there are challenges to growth with the continuing threat of the pandemic amid narrowing policy space. The key policy challenges are to protect long term fiscal sustainability, leverage the private sector in the recovery, and limit the economic scarring from the pandemic.

Full Report | Press Release "PHILIPPINES: Boosting Private Sector Growth Can Strengthen Recovery, Create More Jobs" | Report launch Replay

The World Bank June 2021 Navigating a Challenging Recovery Weighed down by the COVID-19 pandemic, the Philippine economy is forecast to grow at 4.7 percent this year before accelerating to 5.9 percent in 2022 and 6.0 percent in 2023. Local governments have played a crucial role at the front lines of the COVID crisis. A current lack of resources prevents local government units (LGUs) from fulfilling their devolved mandates.

Full Report | Key Findings | Press Release: Ramping Up Vaccination, Improving Pandemic Response Can Strengthen Recovery

Report Launch Replay | Press Release: Mandanas Ruling Provides Opportunities for Improving Service Delivery Through Enhanced Decentralization

The World Bank December 2020: Building a Resilient Recovery The multiple shocks that hit the Philippines – the COVID-19 health crisis, economic activities across the country frozen by quarantine measures, devastating typhoons in November, and the global recession – will likely shrink the economy by 8.1 percent in 2020, temporarily reversing gains made in poverty reduction in recent years. Sustained improvements in managing the pandemic and a possible rebound in the global economy, however, can help the country recover in 2021 and 2022.

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The World Bank June 2020: Braving the New Normal Hammered by natural disasters and COVID-19, the Philippine economy is projected to contract by 1.9 percent in 2020. But there are good chances that the country can bounce back in the next two years.

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The World Bank October 2019: Resuming Public Investment, Fast Tracking Implementation High impact projects and critical reforms are key to regaining higher growth.

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The World Bank April 2019: Safeguarding Stability, Investing in the Filipino Amidst lingering global and local uncertainties, the Philippine economy is poised to grow at 6.4 percent in 2019 and 6.5 percent in 2020 and 2021.

Highlights | Full Report (pdf) The World Bank October 2018: Staying in the Course Amid Global Uncertainty Amidst rising global uncertainty and inflationary pressures, the Philippine economy is poised to remain strong and is projected to grow at 6.5 percent in 2018, 6.7 percent in 2019, and 6.6 percent in 2020.

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The World Bank April 2018: Investing in the Future Investments in infrastructure and education, skills, and health, are not only key to sustaining high growth but will also ensure that poor and vulnerable families have access to better job opportunities. Delivering inclusive economic growth through good jobs remains the country’s most pressing challenge. https://www.worldbank.org/en/country/philippines/publication/philippine-economic-updates Economic forecasts for the Philippines The Philippines' GDP is expected to grow by 5.7% in 2023 and 6.2% in 2024 – ADO September 2023 Philippine inflation rates forecasted at 6.2% in 2023 and 4% in 2024 – ADO September 2023 Figures are based on the latest edition of ADB's Asian Development Outlook, which analyzes economic and development issues in developing countries in Asia and the Pacific. This includes forecasting the inflation and gross domestic product growth rates of countries throughout the region.

Comparative economic forecasts The latest available economic data for the Philippines compared to countries in Southeast Asia. https://www.adb.org/countries/philippines/economy PHILIPPINE ECONOMIC GROWTH is likely to further slow this year and in 2024, amid “strong” external headwinds and the end of “revenge spending,” GlobalSource Partners said in a report.

GlobalSource said it cut its Philippine gross domestic product (GDP) forecast to 5.2% for this year from 5.5% previously. It also slashed its GDP forecast for 2024 to 5% from 5.8% previously.

Both projections are below the government’s 6-7% target this year and the 6.5-8% goal in 2024.

“Economic growth is slackening. On one hand, multiple headwinds continue to buffet the economy — from weak external growth and tight global financial conditions to volatile commodity prices and high local inflation,” GlobalSource analysts Romeo L. Bernardo and Maria Christine Tang said in a report dated Aug. 28.

“On the other hand, the tailwind from post-pandemic revenge spending is losing force and, here as elsewhere, the expected swift recovery of Chinese tourism is not happening,” it added.

The Philippine economy expanded by a weaker-than-expected 4.3% in the second quarter, its slowest growth in over two years.

For the first half, GDP growth averaged 5.3%. The economy would have to grow by 6.6% in the second half to hit the government’s target.

GlobalSource said the Philippine economy will continue to face “strong” headwinds going into 2024, amid a slowdown in major trading partners, relatively tight financial conditions and fiscal constraints

“Although we expect monetary easing to start next year, the absence of new growth drivers beyond remittances and service exports compels a significant reduction in our (2024) GDP growth forecast from 5.8% to 5%,” GlobalSource said.

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An economic rebound will depend on the government’s ability to implement its catch-up plan for spending. The weak second-quarter growth was partly blamed on the 7.1% contraction in government spending.

“We think that under the supervision of economic managers, spending will improve, although not fully and perhaps with potential costs to spending quality,” it added.

Other risks to the Philippine outlook include a potential recession in the US, a sudden spike in inflation due to food supply issues, geopolitical tensions and other shocks, GlobalSource said.

It kept its inflation forecast for this year at 5.5%, while lowering the 2024 projection to 3.3% from 3.5% previously.

Inflation averaged 6.8% in the first seven months of the year, still above the central bank’s revised 5.6% full-year forecast.

GlobalSource expects the Bangko Sentral ng Pilipinas (BSP) to start cutting rates next year, “possibly leading to more upbeat sentiment.”

The BSP earlier this month extended its policy pause for a third straight meeting, keeping its benchmark interest rate at a near 16-year high of 6.25%.

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“The odds of a rate hike will be higher if the sharp currency depreciation comes alongside higher-than-expected headline inflation, reflecting currently high crude oil prices and exacerbated by spikes in prices of key food items, notably rice, and higher-than-expected wage increases,” it said.

However, GlobalSource said the current rate pause is likely to extend through the end of 2023. It noted the BSP is awaiting more definite signals from the US Federal Reserve that it is ending its tightening cycle and beginning its rate cuts.

“Ahead of any Fed cut, the BSP may also consider another cut in banks’ reserve requirement ratio (RRR) if the inflation outlook turns benign. BSP Governor Eli M. Remolona reportedly said that he would like to see the RRR eventually fall to 5% from the current 9.5%,” it added.

In June, the BSP cut the RRR for big banks and nonbank financial institutions with quasi-banking functions by 250 basis points (bps) to 9.5%.

It also reduced the ratio for digital banks by 200 bps to 6% and by 100 bps for thrift banks, and rural and cooperative banks to 2% and 1%, respectively. — Luisa Maria Jacinta C. Jocson

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