Growing pains

PHILIPPINES - Forecast 07 Jun 2023 by Romeo Bernardo and Christine Tang

With his high popularity ratings intact, President Ferdinand Marcos, Jr. steps into his second year in office with another advantage: the business sector has become more at ease with his leadership style. However, he will have a tougher challenge growing the economy. Locally, GDP growth has slowed to 6.4% in Q1, with pent-up demand easing, inflation still high, macro policy space for supporting growth limited and attempts to create fiscal space expected to cost the President much political capital.

Externally, demand has slackened, financial conditions remain tight, and downside risks – economic, financial and geopolitical – are building up. For now, we are keeping our 5.5% GDP growth forecast for 2023 and 5.8% for 2024. Along with everyone else, we are awaiting news of the President’s choice for BSP governor. Governor Felipe Medalla’s term ends on July 3.

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