The Asian Development Bank (ADB) predicted stronger economic growth for the Philippines this year and next, fueled by easing inflation, rising domestic demand and increased government investment.
The ADB said in its report “Asian Development Outlook (ADO) April 2024” that the Philippine economy would grow 6 percent in 2024, with an even stronger 6.2 percent growth in 2025 following an expected easing of monetary policy after a series of rate hikes from 2022 until October 2023.
It’s forecast this year is within the government’s revised economic growth target of 6 percent to 7 percent. The 2025 forecast is lower compared to the government’s target of 6.5 percent to 7.5 percent.
The Manila-based lender said the Philippines would continue to be among the fastest-growing economies in Southeast Asia this year and in 2025.
The report said, however, that severe weather events such as a prolonged El Niño dry weather episode and possible strong typhoons later in the year due to the La Niña phenomenon could result in inflation pressures.
A sharper slowdown in major advanced economies, heightened geopolitical tensions and higher-than-expected global commodity prices could also weigh on growth, the report said.
“The Philippines’ growth momentum is picking up speed, driven by the government’s efforts to improve budget execution, mobilize additional revenue and pursue reforms to boost the investment climate,” said ADB Philippines country director Pavit Ramachandran.
“Investments on large public infrastructure projects, as well as much needed social services, will boost government expenditures and bode well for the economy in the long run,” he said.
The government is pursuing major investments under its “Build Better More” infrastructure development program. Under the program, 67 flagship projects are underway, with 30 more projects approved as of March 2024.
Meanwhile, the ADB expects inflation to moderate to 3.8 percent in 2024 and 3.4 percent in 2025, falling within the 2 percent to 4 percent target range of the Bangko Sentral ng Pilipinas.
Decelerating global oil prices and an extension in reduced tariffs on major food items, including rice, corn and pork until December 2024 would help contain food inflation, according to the report.