By Lisbet Esmael, June 7, 2023; CNN Philippines

Metro Manila (CNN Philippines, June 6) — The World Bank’s outlook for the Philippine economy improved this year as it expects robust demand in the local market to continue despite global headwinds.

In a statement on Wednesday, the World Bank said it has upgraded its growth forecast for the Philippines to 6% from 5.6% in March. The latest forecast is within the 6% to 7% target of the national government.

“Strong domestic demand is underpinned by consumer spending drawing strength from the continuing jobs recovery and the steady flow of remittances,” the bank said.

“Fixed capital investment will also contribute to growth, anchored on upbeat domestic activity, and improved business confidence,” it added.

The country’s services sector will likewise enjoy a spillover from the reopening of China economy, which could spur growth in the local space.

As many nations axed COVID-19 travel rules, the World Bank noted that the Philippines can gain from boosted transportation services, accommodation, and food services, as well as wholesale and retail trade services.

The information technology-business process outsourcing sector would also continue to be a bright spot for growth in the Philippines, with foreign businesses seeking to cut costs.

Recent amendments to the Public Service Act, Foreign Investment Act, and Retail Trade Liberalization law could also bolster the Philippines’ target of enticing more foreign investors, subsequently supporting its growth over the medium term.

But an official of the World Bank warned that global and domestic risks may dampen the economy’s recovery and poverty reduction.

“It is essential to sustain improvements in social protection to help families, especially the poor and vulnerable, cope with economic difficulties as the country navigates the global slowdown, budget constraints, high prices of basic commodities, and climate-related risks,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines, and Thailand.

Locally, threats seen include elevated inflation, looming El Niño, as well as logistics and supply chain challenges.

Philippine authorities earlier noted that the rate of increases in commodity prices has been on a downward trend.

The World Bank also noted that global risks are still the rising inflation and interest hikes worsened by geopolitical tensions.

It also urged the government to hasten the following: adoption of the national ID system for social protection delivery, updating the targeting system for identifying poor and vulnerable families, innovations in digital payment systems, and strengthening financing mechanisms and readiness for disaster response.

“In the face of escalating prices, a comprehensive strategy is needed to guarantee sufficient food for everyone. This entails a more productive agriculture and food system that is resilient to climate risks, serves all consumers, and competes effectively on both local and global markets,” added World Bank senior economist Ralph Van Doorn.