THE Asean+3 Macroeconomic Research Office (Amro) has maintained its 2024 growth outlook for the Philippines at 6.1 percent.
In a statement sent, Amro said the growth will be driven by government spending, public consumption, lower inflation and a strong inflow of overseas remittances.
This preliminary assessment was made by the Asean+3 Macroeconomic Research Office during its annual consultation visit to the Philippines from Aug. 27 to Sept. 6, 2024.
The Amro team was led by principal economist Runchana Pongsaparn.
“The Philippine economy is expected to grow by 6.1 percent in 2024 and 6.3 percent in 2025, driven by higher government spending as well as an upturn in external demand and strengthening domestic demand,” said Pongsaparn.
“Private consumption is anticipated to grow faster for the rest of the year, supported by strong labor market conditions, lower inflation, and robust overseas remittances. With the start of the monetary policy easing cycle, we expect private investment sentiments to improve.”
Marcos’ economic managers expect to finish strong at six to seven percent in 2024 and expand further to 6.5 percent to 7.5 percent in 2025.
The Philippine economy grew by six percent in the first half of 2024, driven by strong domestic demand and export recovery. The labor market remained strong which helped boost domestic consumption. Inflation continued its declining trend from 2023, reflecting a moderation in international commodity prices, the government’s inflation-containing measures, as well as tight monetary policy.
Moreover, Amro sees inflation slowing further to 3.3 percent in 2024 and easing further to 3.1 percent in 2025.
“While upside risks such as wage increases and local food supply shocks remain, the slowdown of headline inflation is expected to continue in the second half of 2024 due to lower international prices of fuel and food and tariff cuts on imported rice,” Amro said.
However, in the near term, the growth prospects of the Philippines could be subject to several risks, according to Amro.
“Higher inflation, especially from food prices, could dampen consumption. At the same time, the economy could be challenged by a potentially sharp slowdown in major trading partners, such as the U.S., Euro Area and China,” the think-tank said.
It said that heightened geopolitical risks could increase the likelihood of global supply disruptions and further global economic fragmentation. The country’s long-term potential growth could be constrained by insufficient infrastructure investment, vulnerabilities to climate change, and the prolonged scarring effects caused by the Covid-19 pandemic.
Moreover, Amro suggested the government should implement measures on labor upskilling and reskilling to raise labor productivity. More efforts should be made to attract foreign direct investments and to encourage technology transfer.
It added that a comprehensive strategy for enhancing the country’s competitiveness, including raising infrastructure investment, continuing digitalization and developing a sustainable economy, is crucial to bolster the Philippines’ economic growth potential. / KOC