The Philippines is somewhat insulated from the prospect of global recession in 2023 due to its domestically-driven economy, Manulife Investment Management Head of Macro Strategy Sue Trinh said on Monday.
In a virtual briefing, Trinh said the country’s gross domestic product (GDP) growth is expected to grow by around 5 to 6 percent in 2023.
“Given the global recession or the fact that many advanced economies will be on recession, the problem for many emerging markets such as the Philippines is the declining foreign demand for export. Thankfully, for the Philippines, private consumption still accounts for around 70 percent of its GDP, it’s relatively insulated from that dynamic specifically,” Trinh said.
“It’s a much more domestically-oriented economy less exposed to the whimsy of external volatility so 71 percent of GDP is private consumption so that’s a pretty good starting point and we should expect the economy to continue benefiting from a more fulsome reopening and credit growth cycle there,” she added.
But compared to 2022, the 2023 GDP growth is likely to be “softer” due to domestic risks including the lagging effect of the aggressive Bangko Sentral ng Pilipinas rate hikes this year, among others, she said.
Interest rate, used by banks to price loans, was raised to 5.5 percent to tame rising inflation. Inflation in November reached 8 percent, the highest since November 2008 and double the upper limit of the government’s 2 to 4 percent target.
For 2022, the government estimates growth to be between 6.5 percent to 7.5 percent.
