For the lead economist of Bank of the Philippine Islands (BPI), the economy of the Philippines will accelerate this year in connection to rising household consumption as well as other factors, according to a Philippine News Agency (PNA) news article.
To put things in perspective, posted below is an excerpt from the news article of the PNA. Some parts in boldface…
Growth of the Philippine economy is expected to accelerate this year, driven by the continued expansion of household consumption, an economist from the Bank of the Philippine Islands (BPI) said.
“We expect the Philippine economy to expand by 6.3% in 2025, outpacing the previous year’s performance, with household consumption remaining its biggest driver,” BPI lead economist Jun Neri said in a commentary released late Wednesday.
Neri earlier forecast a 6.1 percent economic growth for 2024.
Neri said factors sustaining household consumption growth such as remittance inflows, remained in place despite the economic slowdown in major economies.
“With aging populations abroad driving the demand for labor, the impact of headwinds on remittances like trade barriers and anti-immigration sentiment will likely be limited. Remittances also have a strong track record of stability and growth even in times of crisis, as seen during the pandemic,” he said.
Neri said the country’s low unemployment rate is also expected to support consumption.
“This should continue to drive the growth of household income and the expansion of the middle class,” he said.
Latest data from the Philippine Statistics Authority showed that the unemployment rate further went down to 3.2 percent in November last year from 3.6 percent in November 2023.
Consumer spending, meanwhile, is expected to grow at a faster pace this year as inflation remains at a manageable level.
“This improvement will likely be most apparent in discretionary spending after a period of slower growth caused by high inflation, as consumers focused more on essentials,” said Neri.
Inflation will likely settle at 3.5 percent this year, well within the government’s 2 to 4 percent target, Neri said.
Meanwhile, he said the recent reduction in interest rates and banks’ reserve requirement ratio (RRR), will also help boost economic growth.
To recall, the Bangko Sentral ng Pilipinas reduced policy rates for a total of 75 basis points this year.
The BSP also reduced the RRR of universal and commercial banks and non-bank financial institutions with quasi-banking functions by 250 basis points.
Let me end this post by asking you readers: What is your reaction to this recent development? Did you think the economy of the Philippines will be able to grow by at least 6.3% this year?
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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