The Philippines remains one of the brightest spots in the region despite global challenges such as elevated inflation and slower growth, the Department of Finance said Thursday.
The Philippine economy, as measured by the gross domestic product (GDP), grew by 5.5 percent in the first three quarters of 2023––the fastest among the major economies of China (5.2 percent), Indonesia (5.1 percent), Vietnam (4.2 percent), Malaysia (3.9 percent), Thailand (2.0 percent) and Singapore (0.5 percent).
“Despite elevated domestic and world inflation, slow global economic growth, trade restrictions and geopolitical tensions, the Philippines remains to be among the brightest spots in the region,” Finance Secretary Benjamin Diokno said.
Economic expansion remained broad-based as all major production sectors posted year-on-year (YoY) growths in three quarters, led by services (7.0 percent), industry (3.7 percent) and agriculture (1.1 percent).
Multilateral organizations recognize the strong economic performance of the Philippines and expect the country’s expansion to be one of the fastest among its regional peers in 2023, with the Asian Development Bank (ADB) forecasting a growth of 5.7 percent, the ASEAN+3 Macroeconomic Research Office (AMRO) and World Bank (WB) at 5.6 percent and the International Monetary Fund (IMF) at 5.3 percent.
Meanwhile, the Philippines’ external performance remains strong with gross international reserves (GIR) rising to $102.7 billion as of end-November 2023, from $101.0 billion in end-October.
The GIR level represents a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income. This also remains above the IMF’s Assessing Reserve Adequacy (ARA) metric at 1.9 in 2023, higher than China’s 0.7 and Malaysia’s and Indonesia’s 1.1.
The Philippine peso also continues to be supported by structural foreign exchange inflows and ample international reserves.
The peso-dollar exchange rate settled at 55.38 against the US dollar on Dec. 27, 2023, averaging 55.63 year-to-date (YTD). This remains within the peso-dollar exchange rate assumption for 2023 at 55.50 to 56.00 per dollar.
Cash remittances from overseas Filipinos (OFs) also continued to increase. Remittances coursed through banks in the first 10 months of 2023 amounted to $27.5 billion, up by 2.8 percent from $26.7 billion recorded in the same period a year ago.
Based on available data, the Philippines also has the lowest external debt-to-GDP ratio among the ASEAN-5 countries, making it less vulnerable to adverse external shocks, the DOF said.
It said that as of end-third quarter, the country’s external debt-to-GDP was recorded at 28.1 percent, lower than Indonesia’s 28.9 percent and Malaysia’s 69 percent in the same period, as well as Thailand’s almost 40 percent as of second quarter of 2023.
Business process outsourcing (BPO), which is one of the most dynamic and fastest-growing sectors in the Philippines, continues to post higher earnings.
Total BPO export revenues, consisting of computer and other business services, amounted to $21.3 billion in the first three quarters of 2023, or 7.6 percent higher than $19.8 billion registered in the same period in 2022.
Inflation rate continued to decelerate to 4.1 percent in November 2023 from 8.7 percent in January.