AMRO still bullish but trims PH forecast

THE Philippines will likely miss this year's growth target but is still expected to outpace the region, the Asean+3 Macroeconomic Research Office (AMRO) said on Wednesday.

Second-quarter growth was «weaker than we had expected,» AMRO chief economist Hoe Ee Khor said in a briefing. «But we are still quite bullish on the Philippines compared to consensus.»

AMRO cut its 2023 forecast for the country to 5.9 percent, down from 6.2 percent previously and below the government's goal of 6.0 to 7.0 percent. The forecast for next year was kept at 6.5 percent, at the bottom end of the 6.5- to 8.0-percent target for 2024-2028.

The outlook for Asean+3, which comprises the 10 members of the Association of Southeast Asian Nations and trading partners Japan, South Korea and China, was trimmed to 4.3 percent from 4.6 percent.

AMRO, which was established to monitor, assess and report on economic and financial conditions in the region, joined other international organizations in lowering forecasts for the Philippines.

On Tuesday, the International Monetary Fund said it now expected the country to post 5.3-percent growth this year, down from the 6.2 percent projected in July.

It expects growth to pick up in 2024 by 6.0 percent, however, improving from the previous forecast of 5.5 percent.

The World Bank this week also cut its 2023 growth forecast for the Philippines to 5.6 percent from 6.0 percent, citing persistent high inflation, stringent financial conditions and a challenging global environment.

The Washington-based multilateral organization expects growth to accelerate in 2024 but trimmed its outlook to 5.8 percent from 5.9 percent.

«The Philippines has surprised us in the last 2 years because domestic demand has been quite strong and is holding up quite well despite the increase in interest rates, and we think this will continue,» Khor noted.

Domestic demand remains robust, he added, supported by remittances, and the service sector is also thriving despite weaknesses in remittance inflows.

Persistent inflation remains a primary risk to the country's outlook and Khor said that a recent uptick following six months of easing was «going to be a drag on growth.»

AMRO expects domestic