Metro Manila, Philippines — The Philippine economy is expected to grow 6% this year and 6.3% in 2023, but not without risks posed by ongoing geopolitical tensions, the Asian Development Bank ​said in its annual report released Wednesday.

“The economic recovery is expected to gain traction this year and next, underpinned by strengthening domestic investment and consumption,” the Asian Development Outlook said, citing factors like the downtrend in COVID-19 cases coupled with most areas easing to the laxer Alert Level 1.

While both projections are quicker than the 5.6% expansion logged last year, the estimate for 2022 falls short of the economic team’s 7-9% target band while the one for next year is within the 6-7% range pegged for the period.

The relaxation of travel rules for fully vaccinated foreigners will also boost tourism and employment in the services sector, it added.

However, the ADB also warned that the “unpredictable sequence of global events” resulting from the Ukraine-Russia war posed risks to its outlook.

“There is a significant risk that inflation could surge higher with second-round impacts, such as tightening credit markets and higher interest rates,” the ADB said, as it hiked its inflation forecast for 2022 to 4.2% from its 3.7% estimate last December amid rising global oil prices.

The ADB’s latest projection breached the 2-4% target band of the Bangko Sentral ng Pilipinas for the year. But it sees the pace easing within target to 3.5% in 2023 with the expected moderation of commodity costs.

“Heightened and extended geopolitical tensions will dampen global growth, including in advanced economies, particularly Europe and the United States, which are among the Philippines’ key export markets,” the ADB added.

It pegged economic growth for Southeast Asia at 4.9% this year and 5.2% in 2023, both outpacing the subregion’s 2.9% rate last year.

For Developing Asia — which consists of all 46 members of the ADB — growth is expected to hit 5.2% in 2022 and 5.3% next year. Both estimates are milder than the 6.9% growth posted in 2021.