Despite upgrading the growth forecast for this year, the World Bank expects the country's momentum to slow down in 2023 and expand at a slower rate of 5.7 percent due to surging inflation and higher interest rates.
The international financial institution said in its report that it now expects the country to grow slower next year compared to the 5.8 percent projection it made in September.
"In 2023, we've seen a downward revision of growth given the deteriorating global environment," World Bank senior economist Ralph van Doorn said in a media briefing.
"We noticed that the worsening conditions since the summer have affected the global economy and our outlook of the economy, and the Philippines cannot escape gravity," he added.
Van Doorn said there's a risk of prolonged domestic inflation on the domestic side which may dampen domestic household consumption, adding that there's still always a risk of another Covid-19 wave.
"This deteriorating global environment is spilling into the domestic economy and tempering the country's growth prospects in 2023," World Bank Senior Economist Ralph van Doorn added.
Ending 2022 on a high note
Meanwhile, World Bank expects the Philippines to end 2022 on a high note, with GDP projected to grow by 7.2 percent, which is higher than its prior growth projection of 6.5 percent, following the Southeast Asian nation's impressive performance from January to September.
"Now we do expect that the favorable external environment will slow growth momentum in the fourth quarter of (2022) and into (2023)," van Doorn said.
For his part, World Bank Country Director for the Philippines Ndiamé Diop urged the country to maintain its agriculture, health care, and education investments to address vulnerabilities brought on by the Covid-19 pandemic.
In particular, he said that the effects from the Covid-19 pandemic have "worsened child malnutrition and stunting and hampered student learning especially among the poor and most vulnerable families."
"If unmitigated, these shocks can have persistent impacts on people's well-being and damage their future productivity, earnings, and capacities for innovation," he added.
