The World Bank, in its Philippine Economic Update (PEU) for June 2023, reported that the country’s economy expanded by 6.4% year-on-year (yoy) in Q1 2023, higher than the growth of regional peers such as Malaysia (5.6%) Indonesia (5.0%), Vietnam (3.3%, and Thailand (2.7%).
The report said that the continued release of pent-up demand, improved employment and steady remittances supported domestic activity.
The services sector fueled growth, underpinned by the revival of tourism and consumer spending on domestic services.
Among the June 2023 PEU highlights are:
- Robust domestic demand fueled 6.4 percent growth in the first quarter of 2023, countering weaker global demand.
- After peaking in early 2023 inflation fell to 6.1 percent in May after the BSP tightened monetary policy, although it remains well above peer countries in ASEAN.
- The medium-term fiscal consolidation plan is broadly on track with the fiscal deficit in 2022 narrowing to 7.3 percent of GDP and national government debt stabilizing around 61 percent of GDP.
- Going forward, strong domestic demand will drive the economy to grow at 6.0 percent in 2023 and gradually move to its potential over the medium term.
- The economic recovery will support poverty reduction, although the labor market is showing a shift to low-productivity jobs.
- Managing inflation, pursuing revenue-enhancing policies and public spending efficiency, promoting investments, and pursuing a clean energy transition are key drivers to safeguard growth and achieve long term development goals.
The PEU summarizes key economic and social developments, important policy changes, and the evolution of external conditions over the past six months.
It also presents findings from recent World Bank analyses, situating them in the context of the country’s long-term development trends and assessing their implications for the country’s medium-term economic outlook. The update covers issues ranging from macroeconomic management and financial-market dynamics to the complex challenges of poverty reduction and social development.
Source: World Bank
