More think tanks lower growth forecasts for Philippines

MANILA, Philippines — ING Bank cuts below five percent its 2023 economic growth forecast for the Philippines due to the further pickup in inflation as well as the possibility of additional interest rate hikes to be delivered by the Bangko Sentral ng Pilipinas (BSP).

ING Bank lead economist Nicholas Mapa said the Dutch financial giant further lowered its gross domestic product (GDP) growth forecast for the Philippines to 4.8 percent from the original target of five percent for this year.

Originally, ING Bank penned a GDP growth forecast of 5.5 percent for this year after the economy grew by 7.6 percent last year with the full reopening of the economy as strict COVID quarantine and lockdown protocols were lifted.

The Philippines emerged from the pandemic-induced recession with a GDP growth of 5.7 percent in 2021 after shrinking by 9.6 percent in 2020.

Due to external headwinds and the aggressive interest rate hikes delivered by the central bank, the country booked a slower-than-anticipated GDP expansion of 4.3 percent in the second quarter from 6.4 percent in the first quarter.

“After second quarter GDP, we lowered to five percent. Now with projected rate hikes and further pickup in inflation, it’s down to 4.8 percent,” Mapa said in a message to The STAR.

The economy grew by 5.3 percent in the first half and needs to grow by at least 6.6 percent in the second half to meet the lower end of the six to seven percent growth target set by the Cabinet-level Development Budget Coordination Committee (DBCC).

“Factors for the slowdown in growth will be the moderating pace of household consumption as revenge spending fades. 2022 and the early part of 2023 saw a spate of demand for activities related to travel and leisure with