PH growth to remain one of region's highest
12 January 2024
THE Philippines will remain one of the fastest-growing East Asia and Pacific (EAP) economies even as a slowdown in China weighs on the region's expansion, the World Bank said on Tuesday.
In its latest Global Economic Outlook, the Washington-based financial institution retained its estimate of 2023 growth of 5.6 percent and 2024 forecast of 5.8 percent for the country.
Both fall short of the government's 6.0-7.0 percent and 6.5-7.5 percent targets for both years, respectively, but are still among the highest among 23 EAP emerging market and developing economies that include China and Pacific Island states.
The 2023 estimate of 5.6 percent, unchanged from October when the World Bank trimmed its forecast from 6.0 percent, matches that for Mongolia and is only surpassed by Samoa (8.0 percent) and Fiji (7.6 percent).
It is the highest among the eight Southeast Asian nations in the list — Cambodia is second at 5.4 percent — and also surpasses the 5.2-percent expansion seen for China.
Full-year gross domestic product (GDP) results will be announced by the Philippine Statistics Authority at the end of this month. Growth as of the end of the third quarter was a below-target 5.5 percent.
The 2024 forecast of 5.8 percent, meanwhile, is only topped by those for Palau (12.4 percent) and Mongolia (6.2 percent) and is matched by Cambodia.
Philippine economic growth, however, is expected to stay unchanged at 5.8 percent in 2025, during which Palau (11.9 percent), Mongolia (6.4 percent), Vietnam (6.0 percent), and Cambodia (6.1) percent are forecast to perform better.
The outlook also falls below the government's medium-term goal of 6.5-8.0 percent.
Regional outlook
For the EAP overall, the World Bank expects growth to have accelerated to 5.1 percent last year from 3.4 percent in 2022, driven mainly by a short-lived surge in China due to the lifting of pandemic restrictions.
Problems in the real estate sector and weak demand for its exports, however, are now weighing on the region's largest economy and growth is forecast to slow to 4.5 percent this year and further to 4.3 percent in 2025.
"Growth in EAP is forecast to decelerate to 4.5 percent in 2024 and to 4.4 percent in 2025, largely reflecting slower growth in China," the World Bank said.
"Excluding China, growth in the EAP region is projected to strengthen modestly, reaching a solid 4.7 percent in both 2024 and 2025," the World Bank said.
"A more marked uptick is expected in Pacific Island economies this year, driven by the ongoing recovery in tourism," it added.
Excluding China, regional growth is expected to be driven by domestic demand, particularly private consumption.
"Modest inflation and, in many cases, robust labor markets, supported by buoyant services activity, are anticipated to sustain household spending," the World Bank said.
"In some economies, increased government spending, including on social protection and public sector wages, will also support demand," it added.
Investment growth, however, will likely stay subdued and fall short of pre-pandemic averages due to higher interest rates, policy uncertainty in countries where national elections are scheduled, rising debt, and reduced fiscal space.
Risks to the regional outlook, the World Bank said, primarily revolve around weaker-than-expected growth in China and increased geopolitical tensions, while an expanded war in the Middle East could heighten uncertainties and disrupt energy supplies.
Continued global trade weakness, unexpectedly tight financing conditions, and extreme weather events are other downside risks, it added.
"Elevated uncertainty or persistent trade weakness could lead to sustained sluggishness in investment growth and harm potential output growth in the region, which is already expected to soften," the World Bank continued.
"In contrast, stronger-than-expected growth in the United States presents an upside risk to the forecast."
Kindly supplied by Manila Times
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