The Philippine economy is expected to grow by 7.1% in the first quarter, according to a report by First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research. The report cited the manufacturing sector, expected higher infrastructure spending, and easing inflation as key drivers for the expected growth.
Philippines remains a hotspot for investors for tech firms despite slower expansion in manufacturing
Despite the slower pace of expansion in the manufacturing sector, the institutions still expect a good expansion in the first quarter of 2023. Additionally, Philippines and Malaysia are currently marked as hotspots for startups for investors looking at solid returns from young tech firms.
Improvement in Philippine Employment and Economy Growth in Q1 2023, Despite Inflation Concerns and Peso Depreciation
Employment is also expected to improve in February after easing as usual in January. Additionally, report also sees the likely comeback of infrastructure spending as a positive outlook for the economy. While inflation remains a concern, FMIC and UA&P believe it may have peaked in January, and the downtrend should ease concerns of a slowdown in consumer spending.
The Bangko Sentral ng Pilipinas is expected to hike policy rates by 25 bps in its March meeting to 6.25 percent, but this is unlikely to stem the depreciation tendency of the peso, given the Fed’s resolve to raise its policy rates by 25 bps in March and May, and the Philippines’ burgeoning trade deficits. Lastly, the report also cites personal income tax cuts and strong overseas Filipino worker remittances as supporting factors for consumer spending and economic growth in the first quarter.
Indonesia and the Philippines aim to strengthen border cooperation and boost trade between the two countries.
The Philippines and Indonesia are placing emphasis on stronger cooperation in border security and trade, recognizing their significance for bilateral relations. This comes as Indonesia’s exports to the Philippines in 2022 surged by 57%, reaching over $14 billion – a notable increase from the previous year.
Ultimately, the Philippines economy remains positive reported by FMIC and UA&P. Despite slower expansion in manufacturing, the institutions still expect a good expansion in Q1 2023. The Philippines is also a startup hotspot, attracting investors in young tech firms. Furthermore, employment is expected to improve in February, and there is optimism for the overseas workers to come back and spend. Finally, the Philippines and Indonesia are prioritizing stronger cooperation in border security and trade as Indonesia’s exports to the Philippines surged by 57%, reaching over $14 billion in 2022.
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