Both the Asian Development Bank and the International Monetary Fund expect the Philippine economy to grow 6 percent year-on-year in 2024, following the revised 5.5-percent expansion in 2023.
The two global financial institutions also forecast a 6.2-percent gross domestic product (GDP) growth for the Philippines next year, making it one of the fastest-growing economies in Asia.
“Growth forecasts for the Philippines for 2024 and 2025 are unchanged. Domestic demand, along with a recovery in merchandise exports, drove the 5.7-percent GDP growth in first quarter of 2024,” the ADB said in its Asian Development Outlook July update.
“Household consumption growth, while below last year’s level, remained the main contributor supported by low unemployment and remittances from overseas workers. Brisk public infrastructure spending continued to lift growth. Merchandise exports rebounded, particularly electronic products [about 60 percent of total exports, while services exports remained buoyant, including tourism and business process outsourcing,” it said.
The ADB said the moderating inflation and expected monetary easing in the second half of 2024 would support household consumption and investment.
The ADB kept its inflation forecast for the Philippines at 3.8 percent in 2024 and 3.4 percent in 2025.
The IMF, in its latest World Economic Outlook report, also expects the Philippines to grow faster than most economies in Asia this year.
“Asia’s emerging market economies remain the main engine for the global economy,” IMF economic counsellor and research director Pierre-Olivier Gourinchas said in a statement.
The IMF said global growth would be in line with its April 2024 World Economic Outlook (WEO) forecast at 3.2 percent in 2024 and 3.3 percent in 2025.
The IMF encouraged countries to manage the risks of currency and capital flow volatility. “Given that economic fundamentals remain the main factor in dollar appreciation, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to keep inflation close to target. Foreign reserves should be used prudently and preserved to deal with potentially worse outflows in the future, in line with the IMF’s Integrated Policy Framework,” it said.
World trade growth is expected to recover to about 3.25 percent annually in 2024 to 2025 and align with global GDP growth again.
It revised the growth forecast in emerging markets and developing economies upward, with the main drive for the growth coming from Asia, particularly China and India.
“For China, the growth forecast is revised upward to 5 percent in 2024, primarily on account of a rebound in private consumption and strong exports in the first quarter. In 2025, GDP is projected to slow to 4.5 percent, and to continue to decelerate over the medium term to 3.3 percent by 2029, because of headwinds from aging and slowing productivity growth,” the IMF said.
It also raised the growth forecast for India to 7.0 percent this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas.
Meanwhile, the ADB slightly raised its economic growth forecast for developing Asia and the Pacific this year to 5 percent from a previous estimate of 4.9 percent, as rising regional exports complement resilient domestic demand. The growth outlook for next year is maintained at 4.9 percent.
Inflation is forecast to slow to 2.9 percent this year amid easing global food prices and the lingering effects of higher interest rates.
“Most of Asia and the Pacific is seeing faster economic growth compared with the second half of last year,” said ADB chief economist Albert Park.
“The region’s fundamentals remain strong, but policy makers still need to pay attention to a number of risks that could affect the outlook, from uncertainty related to election outcomes in major economies to interest rate decisions and geopolitical tensions,” said Park.
