World Bank lowers PH growth forecast

THE World Bank has 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 also expects growth to slow further in 2024, but trimmed its outlook to 5.8 percent from 5.9 percent.

The revised forecasts all fall below the government's 6.0- to 7.0-percent target for this year and the 6.0- to 8.0-percent for 2024 to 2028.

Gross domestic product (GDP) growth was a below-target 5.3 percent as of the first semester after slower than expected 4.3-percent second-quarter print. Third quarter data will be released next month.

«The big concern has been slowing global growth,» World Bank chief economist for East Asia and the Pacific Aaditya Mattoo said during a briefing on Monday.

«The Philippines, like all the countries in the region, depends on the rest of the world for exports, goods, and especially services, and also a lot of Filipinos work abroad and send remittances back. All those factors are tied to the state of the global economy.»

In its report, the World Bank pointed out that the Philippines' growth momentum was being hindered by factors like high inflation, strict fiscal and monetary policies, budget execution delays, and slow global economic growth.

The worldwide economic slowdown is expected to negatively impact both exports and manufacturing while the fiscal deficit is projected to decrease to 4.1 percent of GDP by 2025.

«Efforts to reduce public spending will continue until 2026, led by the decline in recurrent spending,» the World Bank noted.

It urged the government to enhance tax collection starting in 2024 by implementing new tax measures and reforms aimed at expanding the tax base.

«In the near term, essential factors for boosting growth include containing price pressures and improving budget utilization,» the World Bank said.

«Given agriculture's susceptibility to extreme weather events, an enhanced and rapid food importation system will bolster domestic food supply,» it added.

The report mentioned that this would help keep prices stable even though wages, transportation costs, and imported