2024 GDP growth forecast slashed to 5.8 percent

MANILA, Philippines — The Association of Southeast Asian Nations Plus 3 Macroeconomic Research Office (AMRO) has cut its growth forecast for the Philippines to 5.8 percent for this year, but expects the economy to post faster growth next year, citing easing inflation and interest rates.

In a statement yesterday, AMRO said it expects the Philippines to post gross domestic product (GDP) growth of 5.8 percent this year, lower than the 6.1 percent economic growth forecast provided by AMRO last October.

AMRO’s new 2024 GDP forecast for the Philippines is also below the government’s six to seven percent growth goal for the year.

For 2025, AMRO expects economic growth to accelerate to 6.3 percent.

This forecast is also lower than the 6.5 to 7.5 percent growth the government is aiming for in 2025.

“The Philippine economy is expected to strengthen further with easing inflation and a less restrictive monetary policy,” AMRO said.

AMRO said it expects inflation to fall to 3.2 percent this year and to remain at this level in 2025 from last year’s six percent.

Inflation accelerated to 2.3 percent in October from 1.9 percent in September amid faster upticks in food prices.

This brought average inflation from January to October to 3.3 percent, within the Bangko Sentral ng Pilipinas (BSP)’s two to four percent target band.

The BSP delivered its first rate cut in August, followed by another 25-basis-point rate reduction in October, bringing the benchmark rate to six percent.

Aside from slower inflation and lower interest rates, AMRO expects Philippine GDP growth to be supported by strong domestic demand and a pickup in external demand.

Philippine economic growth slowed to 5.2 percent in the third quarter from the previous quarter’s 6.4-percent expansion and the six percent growth posted in the third quarter last year.

From January to September, the economy grew by an average of 5.8 percent.

Earlier, National Economic and Development Authority Secretary Arsenio Balisacan said the economy needs to grow by at least 6.5 percent in the fourth quarter to attain the six to seven percent growth goal for the year.

The AMRO said risks to the country’s growth prospects include higher inflation that could dampen consumption, as well as a sharp slowdown in major trading partners.

It said heightened geopolitical risks could also lead to supply disruptions and a resurgence of inflationary pressure.

“The country’s long-term potential growth could be challenged by insufficient infrastructure investment, vulnerabilities to climate change and the prolonged scarring effects from the COVID-19 pandemic,” the AMRO said.

To bolster the Philippines’ potential growth, AMRO recommends the implementation of measures to upskill and reskill the workforce and attract foreign direct investments, while encouraging technology transfer.

“To lift growth potential, it is important to develop a comprehensive strategy to enhance productivity and competitiveness. This includes further infrastructure investment and continued development in digitalization as well as promoting a sustainable economy,” AMRO said.