The Asian Development Bank (ADB) and the International Monetary Fund (IMF) kept their outlook for the Philippines’ economic growth for 2024 and 2025 as the multilateral lender expects the country’s inflation to ease.
ADB and IMF, in two different outlook reports, expect the country’s gross domestic product (GDP) growth rate to remain at 6.0 percent this year and 6.2 percent in 2025.
Both of the forecasts fall within the lower end of the Marcos administration’s GDP target range of 6 percent to 7 percent for the year and 6.5 percent to 7.5 percent for next year.
“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.
ADB noted that the country’s household consumption growth, while below last year’s level, remained the main contributor supported by low unemployment and remittances from overseas workers.
However, it said that brisk public infrastructure spending continued to lift growth.
ADB also noted that merchandise exports rebounded, particularly electronic products (about 60 percent of total exports), while services exports remained buoyant, including tourism and business process outsourcing.
“Moderating inflation and expected monetary easing in the second half of 2024 will support household consumption and investment,” the multilateral lender added.
With that said, the ADB expects the country’s inflation rate to stay at 3.8 percent in 2024 and 3.4 percent in 2025.
In its latest World Economic Outlook report, the IMF believes that this year the Philippines’ economy will also grow 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,” IMF said. (TCSP)
