MANILA, Philippines — Global banking giant Citi has lowered its economic growth projection for the Philippines this year, citing weaker-than-expected performance in the third quarter and the impact of weather disruptions that weighed on the country’s economic activity.
Nalin Chutchotitham, economist for the Philippines at Citi, said the economy would likely grow by 5.8 percent this year, lower than their previous forecast of six percent. This is also below the government’s target of six to seven percent for 2024.
The downward revision was mainly due to the 5.2-percent outturn in the third quarter, slower than their previous estimate of 6.4 percent.
“We lower our 2024 GDP growth forecast slightly to 5.8 percent from six percent, mainly due to a weak third-quarter outturn that had been a result of several temporary, weather-related factors,” Chutchotitham said.
“On the supply side, agriculture and construction dragged the slower growth in the third quarter partly due to the impact of El Niño during the planting season and at least seven typhoons during the harvest seasons,” she said.
The fishing sector was also partly affected by a month-long ban in two provinces amid an oil spill incident in July, while outbreaks of African Swine Fever in Batangas also led to lower livestock production since August.
Meanwhile, weakness in the demand side came from the country’s net exports, which subtracted about 2.9 percentage points from the overall GDP growth as good exports fell while exports of services grew at a slower pace of 2.8 percent this year.
However, the weaker third-quarter expansion may not be the start of a longer economic slowdown as growth is expected to pick up to six percent in the fourth quarter.
“Household consumption is expected to continue improving, supported by lower interest rates and improved consumer sentiment as inflation continues to stabilize,” Chutchotitham said.
“With storm season passing soon, we also expect infrastructure projects progress to proceed at a faster clip in the fourth quarter and first quarter of 2025,” she said.
Citi also maintained its six-percent GDP projection for 2025, noting potential driven by favorable impacts from more rate cuts, with expectations of a 25-basis-point reduction in December and a further 75-basis-point cut in 2025.