Philippine macroeconomy: not exactly a Goldilocks scenario

PHILIPPINES - Report 22 Nov 2023 by Diwa Guinigundo

The first three quarters' data on the Philippine output performance shows some recovery, although it would be difficult to achieve the lower end of the output target of 6-7 percent for 2023. Growth drivers are challenged on both the domestic and global fronts. Inflation for the first ten months remains elevated, and based on the BSP's risk-adjusted inflation forecasts, inflation may likely breach both the 2023 and 2024 inflation targets. If output is challenged, the labor market may also see some difficulty in job creation and keeping workers in the workplace. The external sector, faced with global economic weakness, may show some recovery, but similar to growth, keeping the BOP surplus will be hard to deliver. While FX reserves remain substantial, external debt has overtaken it. Public finance may see fiscal space narrowing.

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