The World Bank has retained its 2024 Philippine economic growth forecast at 5.8% and expects the country to be the second fastest-growing economy in East Asia and in the Asia-Pacific region.
In its April 2024 East Asia and Pacific Economic Update report, World Bank revised upward its 2025 Philippine economic growth forecast to 5.9% from the earlier 5.8% projection. The report showed that the Philippines and Cambodia will be the second highest growing economies in East Asia and the Asia-Pacific, next to Palau which is projected to grow by 12.4%.
The projected economic expansion for this year is higher than the 4.5% forecast for China, 4.9% for Indonesia, 4.3% for Malaysia, 5.5% for Vietnam, and 2.8% for Thailand.
“What has sustained growth in the Philippines like much of the region has been consumption and the recovery in services,” World Bank East Asia and Pacific chief economist Aaditya Mattoo said in a recent virtual briefing.
“Regarding the Philippines, I should also say that the good news has been the fact that the government has implemented significant reforms like revision in the Public Services Act, which should begin to pay off in terms of greater foreign investment, may have been slow in the short run but is expected to catch up shortly, he noted.
The World Bank, in a separate Macro Poverty Outlook, also released recently, said the improvement in the Philippine labor market and the easing inflation will help boost growth in household income.
“Poverty is expected to continue to decline but extreme climatic events continue to pose risks. Poverty incidence, using the World Bank’s poverty line for lower-middle income countries of US$3.65/day, 2017 PPP, is projected to decrease from 17.8% in 2021 to 12.2% in 2024 and further dipped to 9.3% in 2026,” it said.
The World Bank noted, however, that risks to the country’s growth outlook remain tilted to the downside. It said elevated inflation could dampen economic activity by keeping the policy rate higher for a longer period. Other risks include a further slowdown in the growth of China and escalating geopolitical tensions which could cause a sharper-than-expected growth slowdown which would further dampen external demand.
Mattoo, for his part, added that the Philippines and other countries in the region remain highly vulnerable to climate shocks. “This region does contribute, especially in countries like China and Indonesia, through emissions to global climate change, but for the most part, the countries are more victims rather than perpetrators,” he said.
Mattoo said the climate shocks necessitate a big investment in adaptation. “These ranges from everything from early warning systems in which the Philippines has been a leader, but also through, you know, better investment in infrastructure and agriculture in more resilient structures that can weather these shocks,” he added. (With PNA)