By citing positive factors in its latest report, the World Bank (WB) raised its Philippine economic growth forecasts for 2024 and 2025, according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from the BusinessWorld report. Some parts in boldface…
THE World Bank (WB) has raised its economic growth forecasts for the Philippines for this year and in 2025, driven by improved service exports and public investments.
But weak consumption and investment will keep the country’s growth below pre-pandemic levels, it said.
In its East Asia and Pacific Economic Update, the Washington-based multilateral lender now expects the Philippine economy to grow by 6% this year from 5.8%.
The Philippines could become the second-fastest growing economy in Southeast Asia, behind Vietnam (6.1%) and ahead of Cambodia (5.3%), Indonesia (5%), Malaysia (4.9%), Laos (4.1%), Timor-Leste (3%), Thailand (2.4%) and Myanmar (1%).
“Among the larger countries, only Indonesia is expected to grow in 2024 and 2025 above pre-pandemic levels, while growth in Malaysia, the Philippines, Thailand and Vietnam is expected to be below those levels,” the World Bank said.
For 2025, it forecasts Philippine economic output to expand by 6.1% from 5.9% in its April forecast.
The lender’s growth forecasts for the Philippines are at the low end of the government’s target of 6-7% for 2024 and below the 6.5-7.5% goal for next year.
The Philippine economy grew by 6.3% in the second quarter, faster than 5.8% in the previous quarter and 4.3% a year ago. In the first half, growth averaged 6%.
The World Bank said service exports and public investment have supported Philippine economic growth, but consumption and private investment remain weak.
From 2024 to 2026, the lender expects the Philippine economy to grow by an average of 6%, it said in a separate report.
This will be supported by remittances, jobs, slower inflation and external demand. However, weaker growth in China, global economic slowdown and weather disruptions are risks to the outlook.
It also projects the government’s budget deficit to fall to 4.6% of gross domestic product (GDP) by 2026 due to improved state spending. This is slightly below the 4.73% target for the year.
Better revenue collection will be supported by key tax measures, improved tax administration and higher dividends from state-owned corporations, the World Bank said.
The lender also raised this year’s growth forecast for the East Asia-Pacific region to 4.8% from 4.5% in April.
“Most East Asia-Pacific economies are expected to experience robust growth in 2024, supported by private consumption and a positive external environment,” according to the report. In 2025, the region is expected to grow by 4.4% from its previous forecast of 4.3%.
However, domestic demand is expected to moderate in the Philippines, Indonesia and Thailand, while private investment growth remains weak across the region.
“Investment growth has been declining across most countries in the region over the past two decades, with particularly sharp drops in China, Indonesia, Malaysia, and more recently, the Philippines.”
It also noted that the Philippines and Malaysia have kept a conservative fiscal stance due to their higher structural deficit this year.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines has enough momentum to exceed the WB’s economic growth forecasts for 2024 and 2025?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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