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McKinsey expects PH economy to stay resilient, expand by up to 6.1% in 2024

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Global management consulting firm McKinsey & Company said Wednesday it expects the Philippine economy to grow between 5 percent and 6 percent in 2024.

“Despite various global economic pressures, the Philippine economy is expected to remain resilient,” McKinsey said in a new article titled “The Philippines economy in 2024: Stronger for longer?”

It said the Philippines ended 2023 as the fastest-growing economy across Southeast Asia, with a growth rate of 5.6 percent. This was driven by a resumption in commercial activities, increased public infrastructure spending and growth in digital financial services.

“Looking ahead to 2024, the current economic forecast for the Philippines projects GDP growth between 5 and 6 percent,” it said.

“We assess there to be there are three potential scenarios for the country’s growth, within 5 to 6 percent of GDP,” said McKinsey Philippines managing partner Jon Canto.

It predicted a 4.8-percent growth amid challenging conditions that could keep policy rates high and slow down private consumption, resulting in slower long-term growth.

Under the soft-landing scenario, it forecast a growth of 5.2 percent where inflation moderates, and global conditions turn out to be largely favorable due to a stable investment environment and regional trade demand.

It said growth could accelerate to 6.1 percent, if inflation slows and public policies accommodate aspects such as loosening key policy rates and offering incentive programs to boost productivity.

McKinsey said the financial services sector is expected to grow 5 percent in 2024, slightly lower than 7 percent growth in 2023. Financial inclusion, digital adoption, unsecured lending and elevated interest rates are key trends to watch out for in the sector, it said.

Meanwhile, the outlook for the energy sector is positive, with the potential to grow by 7 percent in 2024, it said.

“Upgrading the transmission grid to make it more flexible and better able to cope with the intermittent electricity supply can be critical as the sector pivots toward renewable energy. Positioning natural gas as a transition fuel could stimulate exploration and production investments. Lastly, the increasing momentum of green energy auctions could facilitate the development of renewables at scale,” the consulting firm said.

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