BMI, a Fitch Solutions company, sraised its growth forecast for the Philippines this year to 5.7 percent from 5.3 percent following the better-than-expected performance of 5.9 percent in the third quarter.
“We think that real GDP growth will continue to accelerate gradually over the coming quarters on the back of a pick-up in household spending and we forecast the economy to expand by 6.2 percent in 2024,” BMI said.
BMI said, however, the government’s target of 6.5 percent 8.0 percent GDP growth next year “is incredibly hard to achieve,” pointing to the external sector as one of the biggest areas of weakness that could linger over the coming quarters.
“Against the backdrop of weak global growth, demand for Philippine goods and services looks set to remain lackluster. Indeed, our global team is forecasting the world economy to expand by just 2.1 percent in 2024 compared to 2.6 percent in 2023,” it said.
It said the US and China, which are the Philippines’ major trading partners, are set for a slowdown. BMI sees the Chinese economy slowing sharply from 5.2 percent in 2023 to 4.7 percent in 2024.
Meanwhile, its base case is for the US economy to enter a shallow recession sometime next year. Both countries account for about 30.0 percent of Philippine total merchandise exports.
“This makes it exceedingly difficult for Philippine trade to stage a turnaround next year,” BMI said.
The third-quarter growth of 5.9 percent almost touched the low end of the target range of 6 percent to 7 percent for 2023. Growth drivers were agriculture, forestry, and fishing; industry; and services, which expanded by 0.9 percent, 5.5 percent, and 6.8 percent, respectively.
Average GDP growth in the first three quarters settled at 5.5 percent, below the target range of 6 percent to 7 percent.
Economic managers said the GDP should grow by 7.2 percent in the last quarter to hit the low end of the target range.
