Despite slower economic growth due to global headwinds, the World Bank on Tuesday expressed the belief the Philippine economy would still expand at one of the highest rates in the Southeast Asian region.
In an economic forum in Makati City, World Bank country director for the Philippines Ndiamé Diop said he expects the Philippine economy to grow by 5.6 percent from its expected 7.2 percent growth last year.
Diop, however, warned of uncertainties that could impact growth, including the tightening of monetary policy in the Philippines, which could affect borrowing costs, consumption and investment.
While the Philippine economy is projected to slow down this year, the World Bank expects the country to have the second fastest growth in Southeast Asia next to Vietnam, which is projected to grow by 6.3 percent this year.
Diop added that despite the uncertainties in the global economy, the World Bank sees nations escaping a widespread recession in 2023, though global growth would remain low.
He cited two factors critical to growth: The trajectory of interest rates in the US and energy prices, particularly the impact on energy demand due to China’s reopening from Covid.
Diop said the 7.6 percent growth posted by the Philippines last year was remarkable in a world characterized by a pandemic, war, and global uncertainty.
Diop revealed that the World Bank has been discussing with the IMF the potential for global economic growth, with both organizations constantly revising their numbers due to the turn of events.
“For 2023, the baseline is we may escape recession, but global growth will be very low. The growth will be ‘one shock’ away from recession,” Diop said.
He pointed out the challenges for the government in the coming year, including healthcare and addressing the digital divide. Diop emphasized the importance of investing in human capital, such as in education and training, to support long-term economic growth.