What does 2023 hold for the Philippines’ economy?

| Article

The COVID-19 pandemic and other geopolitical events have caused a global crisis over the past couple of years. Major upheavals of this scale are not unknown—in the 20th century, various significant events shook the world, like both World Wars and the Cold War. Between these periods of disruption, global events played out across three “eras”: the Post-War Boom after the Second World War, the Era of Contention from 1972 to 1974, and the Era of Markets from 1989 to 1992, each of which had distinct characteristics and opportunities.

The effects of the current crisis, both humanitarian and economic, cannot be underestimated. However, as the world continues to emerge from the pandemic, business leaders can take advantage of these upheavals, and shape innovation and growth—as evidenced in previous eras—by anticipating future disruptions and shaping strategies accordingly. This kind of “era thinking” is particularly valuable in the Philippines, where disruptions caused by the conflict in Ukraine and international supply-chain crises have had a clear impact.

Looking ahead into 2023, the economic forecast for the Philippines remains a moving target. After a record 10 percent contraction in 2020, the country may bounce back in 2023 with projected growth of around 5.3 percent, though it will hardly rise above preCOVID-19 levels (exhibit).

The Philippines ended 2022 with one of the fastest growth rates on record, but still is barely ahead of pre-COVID-19 growth rates.

Key challenges face the country: significantly high unemployment numbers; a high inflation rate (forecast to reach 5.1 percent in 2023); rising policy rates; import and export bottlenecks; and the declining strength of the Philippine peso against the American dollar.1

The state of the Philippines’ economy in seven major sectors

This article analyzes seven key sectors that offer a detailed insight into the state of the Philippines’ economy in 2023 and beyond. As the data shows, the outlook is complex—there are serious issues to address, but also reasons for optimism.

Real estate and construction

Real estate and construction industries may be affected by policy rates and supply-chain issues in 2023.
Real estate is likely to experience continued recovery, supported by emerging industries and easing restrictions.
Return-to-office policies will likely boost demand, but redefined workspaces will be needed.

Travel and hospitality

The 2023 outlook for the travel and hospitality industry is stronger than for the airline industry.
Philippine tourism is forecast to return to pre-pandemic levels by 2024, driven by domestic demand.
Revenge leisure travel demand may drive recovery in 2023, while business travel is expected to lag.
The hospitality industry is expected to recover faster than airlines in 2023.

Financial services

The financial industry in 2023 may be affected by global macroeconomic shocks and the push for interoperability and digitization.


Supply-demand balance: At the current trajectory, the market is expected to become tighter as growth in demand may outstrip that of supply.


The healthcare industry’s growth is expected to level off in 2023, though demand growth will likely increase.
The healthcare industry's growth outlook varies by subsector.

Despite significant growth in 2022, the Philippines still has some catching up to do. There is no doubt that it faces global macroeconomic headwinds in 2023, however big pockets of opportunity exist within each of its biggest sectors. To grasp these as soon as possible, companies need to rethink how they deliver to customers and operate their businesses. With such strategies in place for possible future disruptions, the Philippines can stand strong and continue to grow its economy in the year ahead.

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