In 2023, the World Bank Group predicts that the growth of the world economy will…
BPI updates its 2023 GDP prediction for the Philippines.
Following the stronger-than-anticipated growth in the first quarter, the Ayala-led Bank of the Philippine Islands (BPI) has increased its growth forecast for the Philippine economy this year from 5 to 6 percent to 6.3 percent.
In the first quarter of this year, GDP increased by 6.4 percent year over year, exceeding the average prediction of 6.2 percent; risks included the impact of higher inflation and interest rates, among other things.
According to a report released on Thursday by BPI, base effects are to blame for the lower growth reading in the first quarter of this year compared to 7.1 percent in the final quarter of 2022 and 8 percent last year.
“Now that the GDP is above the pre-pandemic level, growth should revert to its potential level of around 6 percent,” it stated.
Given the most recent print and the strengthening outlook for inflation, “we have adjusted our full-year GDP forecast to 6.3 percent,” it continued.
After reaching a 14-year high of 8.7 percent in January of last year, the rate of price rises slowed down for the third consecutive month in April to 6.6 percent.
As of last April, the average inflation rate was 7.9 percent, exceeding the government’s goal range of 2 to 4 percent.
According to the research, consumer spending has remained strong despite the high rate of inflation, increasing by 6.3 percent in the first three months of this year, which is greater than the 6.1 percent pre-pandemic average growth.
This would indicate that people are still engaging in retaliation spending, which might be counteracting the effects of inflation, the report stated.
Weaker margin pressure may allow businesses to concentrate more on capital expenditures, according to the BPI.
“Consumers may be able to spend more on discretionary items,” it continued.
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