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June 22, 2024

OECD lowers Philippines growth forecast for 2023

The Organization for Economic Co-operation and Development (OECD) has revised its growth projection for the Philippines this year to 5.6 percent, down slightly from its previous estimate of 5.7 percent.

This adjustment is based on factors such as a strong rebound in government spending in the second half of 2023, fiscal stimulus measures, and a subdued second-quarter growth rate of 4.3 percent, primarily due to reduced government and investment spending as well as higher inflation and borrowing costs.

The OECD maintained its 2024 growth forecast at 6.1 percent, but this remains below the government’s target range of 6.5 to 8.0 percent.

The services sector is expected to continue its growth trend, supported by improved prospects in tourism and the business process outsourcing industry, but trade faces challenges due to weak external demand and global inflation risks.

The OECD also expressed concerns about high global inflation affecting the Philippine peso and government borrowing costs.

The Philippine central bank is likely to maintain a high-interest rate regime to address inflation risks.