HIGH inflation and interest rates are expected to prevent the Philippines from hitting its growth target this year, according to the latest economic brief from Maybank.
The Philippine economy is expected to post a growth of only 5.5 percent by yearend. This is below the target set by the Development Budget Coordination Committee (DBCC).
In June, the DBCC said its growth assumption was set at 6 to 7 percent for 2023 and 6.5 to 8 percent between 2024 and 2028.
“We expect Philippines’s real GDP 2023 growth to ease to 5.5 percent as we see growth being affected by global economic downturn and domestic headwinds due to the combo of elevated inflation and interest rates,” Maybank said.
“Hence, we expect sluggish external demand in coming quarters, with China’s economic activities so far [having] been slower than expected despite the zero Covid-19 policy exit and full reopening,” it added.
Maybank noted the results of the latest Business Outlook Survey by the Bangko Sentral ng Pilipinas (BSP) showing businesses were less optimistic for the third quarter of the year and the next 12 months.
The economic brief also cited the constraints identified by survey respondents, topped by high interest rates. Maybank noted that rising interest rates are expected to dampen business sentiment and job creation moving forward. However, Maybank noted the improvement in the recent employment numbers. Given this, Maybank expects the unemployment rate to continue improving.
Last week, the Philippine Statistics Authority (PSA) reported that the country’s unemployment rate was at 4.3 percent, the second lowest since April 2005 when the government changed the definition of unemployment, adopting the ILO’s. In November 2022, the jobless rate was at 4.2 percent. (Earlier story here: https://businessmirror.com.ph/2023/07/07/unemployment-down-to-second-lowest-rate-in-may-psa/).
There were a total of 2.17 million unemployed Filipinos in May, a 760,000 decline year on year from the 2.93 million posted in May 2022. This was also 89,000 less than the 2.26 million posted in April 2023.
To sustain the country’s recent employment gains and ensure that Filipinos can secure the jobs of the future, workers need to enroll in upskilling and lifelong learning programs.
National Economic and Development Authority (Neda) Secretary Arsenio M. Balisacan said retooling and upskilling as well as lifelong learning programs are already being offered by both government and private education and training institutions.
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