External headwinds expected to suppress GDP growth
The Philippines’ strong economic growth may not be sustained as global headwinds build up.
New York-based Global Source Partners Inc said in its quarterly report that the unprecedented headwinds is dampening the optimism of maintaining a bullish GDP for the Philippines.
During the third quarter, the country registered a better–than-forecast 7.7 percent performance despite high commodity prices and rising interest rates.
“Apart from eroding consumers’ purchasing power, rising inflation and interest rates will trim firm profitability and threaten the liquidity and solvency of the less credit-worthy corporations, especially those with unhedged foreign debts,” Global Source analyst and former finance undersecretary Romeo Bernardo said.
“So far, while firms have been busy replenishing inventories, spending on fixed investments remained markedly below pre-pandemic levels and a credit crunch will dull investment appetites even more, with negative effects on labor markets as well,” he added.
Global Source is forecasting a five percent GDP growth for 2023, a significant slowdown from its 6.8 percent assumption this year.
This projection falls below the 6.5 to 8 per cent target set by the government for 2023.
Other banks and multilateral lenders have also cautioned of growth slowdown in 2023, as inflation persists. The recent consecutive interest rate hikes are also expected to take their toll.
