Several economic factors and the continued vulnerability to climate-driven shocks make it unlikely for the Philippines to achieve gross domestic product (GDP) growth of 6% in the medium term, according to a news report by BusinessWorld citing Moody’s Ratings.
To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…
MOODY’S RATINGS said the Philippines’ medium-term growth outlook seems bleak as its slow investment recovery and vulnerability to climate-driven shocks may derail its economic rebound.
In a statement following its latest rating action on the Philippines, the debt watcher said the country’s gross domestic product (GDP) growth is expected to hover below its pre-pandemic level of around 6% over the medium term.
“The Philippines’ medium-term growth will continue to be underpinned by favorable demographics, resilient remittances and service exports, and a gradual strengthening of investment as confidence recovers, with electronics and other goods exports providing a more marginal offset,” Moody’s Ratings said late on Monday.
“Even so, we expect medium-term potential to settle somewhat below the near-6% pace recorded before the pandemic, as investment recovers only gradually and the economy remains exposed to recurrent natural disasters and climate-related shocks,” it added.
Moody’s slashed its Philippine GDP growth forecast for this year to 3.6% from 5.5%. This falls near the bottom end of the government’s 3.5%-4.5% target for the year.
In the second quarter, GDP growth tumbled to a new post-pandemic low of 2.3%, bringing average growth to 2.6% in the first half.
The fourth consecutive quarter of slowing growth came as investments continued to reel from last year’s flood control corruption scandal, while rising prices amid the Middle East war squeezed household spending.
Moody’s Ratings noted that the Middle East war shocks and investment slump are “largely cyclical,” with an investment-driven recovery expected later this year.
“The recovery from the second half of 2026 should be led by a rebound in public investment as the government resumes stalled disbursements and normalizes spending execution,” it said.
Moody’s Ratings said that local investments should focus on public infrastructure and public-private partnerships, especially in renewable energy “as the country diversifies its energy mix in response to the recent shock.”
The government’s recent reforms should also eventually boost investment and productivity as their benefits are realized, the debt watcher said.
These include the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act, foreign investment liberalization, and allowing more private and foreign participation in sectors such as renewable energy.
By 2027, Moody’s Ratings expects GDP to expand by 5.3%, although still slower than its previous estimate of 5.6%.
Let me end this post by asking you readers: What is your reaction to this recent development? Are you convinced that the economy of the Philippines really does not have enough strength to achieve 6% GDP growth anytime soon? Do you think the current economic managers know what they are doing? Do you think there will absolutely be no economic gains from the Philippines’ hosting of the 2026 ASEAN Summit?
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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