MANILA -The Asean+3 Macroeconomic Research Office (AMRO) cut its growth forecast for the Philippines in 2023 to 5.9 percent from the 6.2 percent that it forecast last July, along with a similar downshift for the entire region.
Asean (Association of Southeast Asian Nations) includes the Philippines, Indonesia, Malaysia, Thailand, Singapore, Brunei, Cambodia, Laos, Myanmar and Vietnam. Meanwhile, “+3” refers to China, South Korea and Japan.
In the October update of its Asean+3 Regional Economic Outlook report, AMRO said the region is now expected to grow collectively by 4.3 percent instead of the 4.6 percent forecast three months ago.
The revision is attributed mainly to the weaker-than-expected growth in China.
The Singapore-based think tank said domestic demand continued to be the main engine of Asean+3’s growth.
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In this respect, strong employment conditions and improving household incomes continued to underpin the strength of private consumption.
Also, activities in domestic-oriented sectors like retail trade and food and beverage have been bolstered by the robust recovery in travel and tourism.
In turn, strong consumer spending has helped improve business sentiment across the region despite external headwinds, and investment activity has steadily expanded in several economies.
El Niño a wild card for inflation
“Despite the gloomy headlines surrounding China’s economic performance, we must view things in perspective,” AMRO chief economist Hoe Ee Khor said in a statement.
“Beyond the real estate sector, manufacturing investment is holding up and consumer spending is starting to get back on track—these should have positive spillover effects across the rest of Asean+3,” Khor said.
READ: Developing Asia on track to grow faster in 2023 – ADB
Still, AMRO noted that the resurgence of global food and energy prices in recent months is sparking concerns of another commodity price spike, with the risk of higher inflation becoming more salient.
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“El Niño is the wild card for inflation, especially if it leads to additional restrictive trade policies on key agricultural imports such as rice,” Khor said. “The impact of commodity prices on Asean+3 inflation will be sharper, if the strength of the US dollar relative to the region’s currencies continues,” he added. INQ
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