BANK of the Philippine Islands (BPI) said the Philippines could avoid falling into recession in 2023 if laggard industries like restaurants, hotels, and transport pick up the slack, adding that first half 2023 growth could come in at 5%.
BPI Lead Economist Emilio S. Neri, Jr. said in an online briefing that other high-contact industries that are catching up to their pre-pandemic growth levels are construction and arts and entertainment, which he expects to be the main drivers of gross domestic product (GDP) growth in 2023.
“We should probably aspire for not just avoiding a recession but actually seeing a decent growth rate in 2023. But we believe that this is true,” he added.
“It will be these lagging sectors we think that will drive growth in the first semester and will help us grow by 5% at least,” Mr. Neri said.
BPI noted that arts and entertainment grew 50% to 60% while hotels and restaurants grew 30% to 40% in the last two quarters.
“More likely than not a coping mechanism of the average Filipino family was to avail of credit… to cope with higher prices and be able to bring their kids back to school for the reopenings,” Mr. Neri said.
Along with rebounding industries, an increase in household consumption projected at 5% could also help the Philippines avoid a recession.
“Favorable demographics will mean household consumption will grow by at least 5% in 2023,” the bank said.
BPI projects GDP growth in 2023 of between 5% and 6%, which is lower than the government’s estimate of 6% to 7%, with the bank citing high inflation, which came in at 8% in November.
BPI said growth forecast is sufficient to help the Philippines avoid a recession.
Mr. Neri told BusinessWorld that inflation is likely to continue rising in 2023 judging from its current trajectory, which will affect GDP growth.
“The other thing that could (dampen) growth is of course inflation. That’s quite obvious when consumers have to settle for smaller budgets (that) purchase the same amount of goods. It can really affect overall consumption,” Mr. Neri said.
“If there is no sharp improvement in investment, which is crucial for growth rates above 7% for the Philippine economy, we will find it very difficult to achieve the original goal of 6-7% and we may be able to settle for something like 5-6%,” Mr. Neri added. — Aaron Michael C. Sy