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Philippines Economic Forecast

Philippines Economic Outlook

In Q4 2022, the economy beat market expectations, bringing full-year growth to a 46-year high and the strongest rate in ASEAN. That said, annual GDP expanded at a slower pace compared to Q3 on softer increases in private spending and investment. Higher inflation eroded non-discretionary purchases, while weaker business confidence weighed on capital formation. More positively, public spending and exports growth both ticked up. In Q1 2023, GDP is likely expanding at a somewhat softer, but still robust, pace. In January, the manufacturing PMI rose to a seven-month high due to sharp increases in output and new orders. Less positively, inflation strengthened during the same month, prompting another interest rate hike in February. In other news, since the start of the year, the government raised USD 5.1 billion in a bond sale, which will finance public spending this year.

Philippines Inflation

Inflation grew to 8.7% in January on stronger price pressures for food (December: 8.1%). One of the most aggressive monetary policy tightening cycles in ASEAN, lower global commodity prices and government subsidies should bring inflation back within the Central Bank’s 2.0–4.0% target range by Q4 2023. Potential currency weakness and global supply shocks pose upside risks.

Philippines Economic Data

2017 2018 2019 2020 2021
Population (million) 104.2 105.8 107.3 108.8 110.2
GDP (USD bn) 328 347 377 362 394
GDP per capita (USD) 3 3 3 3 3
GDP (PHP bn) 16 18 19 17 19
Economic Growth (Nominal GDP, ann. var. %) 9.4 10.3 6.9 -8.0 8.1
Economic Growth (GDP, ann. var. %) 6.9 6.3 6.1 -9.5 5.7
Domestic Demand (ann. var. %) 7.1 7.8 5.6 -12.2 7.5
Private Consumption (ann. var. %) 6.0 5.8 5.9 -8.0 4.2
Government Consumption (ann. var. %) 6.5 13.4 9.1 10.5 7.1
Fixed Investment (ann. var. %) 10.6 12.9 3.9 -27.3 9.9
Exports (G&S, ann. var. %) 17.4 11.8 2.6 -16.1 8.0
Imports (G&S, ann. var. %) 15.1 14.6 2.3 -21.6 13.0
Manufacturing Production (ann. var. %) 8.0 5.1 3.8 -9.8 8.8
Unemployment (% of active population, aop) 5.7 5.3 5.1 10.4 7.8
Fiscal Balance (% of GDP) -2.1 -3.1 -3.4 -7.6 -8.6
Public Debt (% of GDP) 40.2 39.9 39.6 54.6 60.4
Money (ann. var. of M2 %) 11.6 8.6 10.9 10.3 8.9
Inflation (CPI, ann. var. %, eop) 2.9 5.2 2.4 3.3 3.1
Inflation (CPI, ann. var. %, aop) 2.9 5.2 2.4 2.4 3.9
Inflation (PPI, ann. var. %, aop) -0.9 3.2 -2.3 -4.6 -1.8
Reverse Repurchase Rate (%, eop) 3.00 4.75 4.00 2.00 2.00
91-Day Treasury Bill (%, eop) 2.00 5.36 3.19 1.01 1.14
10-Year Bond Yield (%, eop) 5.58 7.07 4.45 3.02 4.82
Stock Market (ann. var. of PSEi %) 25.1 -12.8 4.7 -8.6 -0.2
Exchange Rate (PHP per USD, eop) 49.92 52.59 50.65 48.02 50.99
Exchange Rate (PHP per USD, aop) 50.41 52.67 51.78 49.60 49.29
Current Account Balance (USD bn) -2.1 -8.9 -3.0 11.6 -5.9
Current Account Balance (% of GDP) -0.7 -2.6 -0.8 3.2 -1.5
Merchandise Trade Balance (USD bn) -27.4 -43.5 -40.7 -24.6 -42.2
Merchandise Exports (USD bn) 68.7 69.3 70.9 65.2 74.7
Merchandise Imports (USD bn) 96.1 112.8 111.6 89.8 116.9
Merchandise Exports (ann. var. %) 19.7 0.9 2.3 -8.1 14.5
Merchandise Imports (ann. var. %) 14.2 17.4 -1.1 -19.5 30.1
Foreign Direct Investment (USD bn) 10.3 9.9 8.7 6.8 10.5
Remittances (USD bn) 28.1 28.9 30.1 29.9 31.4
International Reserves (USD bn) 81.6 79.2 87.8 110.1 108.8
International Reserves (months of imports) 10.2 8.4 9.4 14.7 11.2
External Debt (USD bn) 73.1 79.0 83.6 98.5 106.4
External Debt (% of GDP) 22.3 22.8 22.2 27.2 27.0

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