Fitch Solutions, a unit of Fitch Group, maintained on Friday a 5.9-percent growth forecast for the Philippine economy this year, taking into account the risks coming from elevated inflation and the possibility of further rate hikes by the Bangko Sentral ng Pilipinas.
Fitch Solutions said in a report the Philippine economy grew beyond expectations last year at 7.6 percent, the fastest in 46 years. In the fourth quarter, GDP growth slowed to 7.2 percent from 7.6 percent in the third quarter.
“The economy has performed a little better than we at Fitch Solutions had expected. But we are holding on to our forecasts for growth to slow to 5.9 percent in 2023. High inflation alongside continued and significant monetary tightening is also likely to weigh on domestic economic activity in the coming quarters,” it said.
It said the prospects for global demand remained tepid, which bodes poorly for the Philippines export outlook.
“The main drag on fourth quarter growth came from gross fixed investment, which slowed sharply from 9.9 percent year-on-year in third quarter to 6.3 percent year-on-year in fourth quarter. This provides early evidence that the Bangko Sentral ng Pilipinas’ aggressive monetary tightening cycle is already starting to weigh on investment prospects,” Fitch Solutions said. Julito G. Rada