Updates on the Philippines’ Economic Growth Outlook for 2024 by Multilateral Banks and Credit Rating Agencies 

World Bank 

Philippines’ growth to expand by 5.8 percent in 2024 

According to the latest East Asia and Pacific (EAP) Economic Update from the World Bank, the Philippine gross domestic product (GDP) is projected to expand by 5.8 percent this year, marking the swiftest growth in Southeast Asia alongside Cambodia. The World Bank also revised its GDP forecast for the Philippines in 2025 to 5.9 percent, up from the previous estimate of 5.8 percent.  

Nevertheless, the growth projections set by the World Bank for the Philippines fall slightly short of the government’s targets, which aim for a GDP growth rate of 6.0 to 7.0 percent in 2024 and 6.5 to 7.5 percent in 2025. Achieving the forecasted growth for 2024 would position the Philippines as the fastest-growing economy in Southeast Asia, along with Cambodia, which is also anticipated to reach a growth rate of 5.8 percent this year.  

Substantial reforms to boost foreign investments but climate change, geopolitical conflicts continue to pose risk to increase in inflation 

Aaditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific, foresees the Philippines benefiting from substantial reforms, (https://business.inquirer.net/452739/world-bank-bullish-on-ph-growth ) such as the amended Public Service Act, which is anticipated to yield increased foreign investment. Meanwhile, identified risks and shocks include susceptibility to climate-related disruptions and the potential economic repercussions of geopolitical conflicts, which could lead to elevated inflation and diminished growth across various global regions. Additionally, a resurgence in inflation in the United States may result in prolonged higher interest rates, exerting an impact on growth throughout the region. 

WB Inflation Outlook 

The World Bank’s Macro Poverty Outlook forecasts an average inflation rate of 3.6 percent in the Philippines for this year, decreasing to 3.0 percent in both 2025 and 2026. Furthermore, it anticipates a decline in the country’s poverty incidence, based on a poverty line of USD 3.65 (PhP 206.23) per day for lower-middle-income nations, from 17.8 percent in 2021 to 12.2 percent in the current year and to 9.3 percent by 2026.  

Asian Development Bank (ADB)  

Philippines’ 2024 economic growth to reach 6.0 percent 

The Asian Development Outlook (ADO) released by the Asian Development Bank for April 2024 projects that the Philippine economy will experience a growth rate of 6.0 percent for the current year, (https://www.gmanetwork.com/news/money/economy/903353/adb-sees-philippine-economy-growing-by-6-in-2024/story/)  which is expected to further accelerate to 6.2 percent in 2025. According to the report, the Philippines is poised to sustain its position as one of the fastest expanding economies in the Southeast Asian region this year and the following year.  

Government’s initiatives and infrastructure projects to boost economic standing  

Pavit Ramachandran, the country director of ADB Philippines, stated that,  

“The Philippines’ growth momentum is picking up speed, driven by the government’s efforts to improve budget execution, mobilize additional revenue, and pursue reforms to boost the investment climate. Investments on large public infrastructure projects, as well as much needed social services, will boost government expenditures and bode well for the economy in the long run.”  

ADB Inflation Outlook  

ADB foresees the 2024 inflation to reach 3.8 percent, then slightly lowering to 3.4 percent the following year. The report indicates that the moderation in global oil prices and the extension of reduced tariffs on key food products such as rice, corn, and pork, until December of this year will contribute to curbing food inflation. 

Moody’s  

Philippines’ growth outlook for 2024 remains unchanged at 5.9 percent  

Moody’s gross domestic product (GDP) projections for 2024 and 2025 remain unchanged at 5.9 percent and 6.0 percent, respectively, which are below the government’s goals of 6.0 to 7.0 percent and 6.5 to 7.5 percent. 

Domestic demand to keep economy growing despite falling short of targets 

Moody’s anticipates that domestic demand will remain the driving force behind Philippine economic growth, although it is expected to fall short of targets, albeit still among the highest in the Southeast Asian region. However, Moody’s predicts a deceleration in GDP growth across most emerging markets (EM) this year, with stabilization expected in 2025 as economies gradually transition towards sustainable growth following the aftermath of the pandemic.  

Moody’s Inflation Outlook 

Regarding inflation, Moody’s expects inflation to close at 3.8 percent in 2024. Additionally, Moody’s highlights the potential risks to its forecast, citing the possibility of significant spikes in energy prices, particularly oil and gas, or an escalation in global food prices due to adverse weather events as primary concerns. 

Fitch Ratings  

Philippines’ growth to increase by 6.4 percent in 2024 

Philippines’ growth to increase by 6.4 percent in 2024 

Fitch Ratings anticipates a 6.4 percent growth in the Philippine economy for 2024, indicating a swifter recovery compared to 2023, and signaling a potential conclusion to the central bank’s tightening cycle. This forecast falls within the government’s target range of 6 to 7 percent for the current year. 

Looking ahead to 2025, Fitch projects a 6.5 percent expansion in Philippine economic output. This projection positions the Philippines as the fastest-growing economy in the region for the upcoming year, alongside Vietnam. 

Fitch Ratings’ confidence in GDP driven by infrastructure investments and trade reforms  

Krisjanis Krustins, the primary sovereign analyst for the Philippines at Fitch Ratings, expressed expectations that Philippine GDP growth would maintain levels above 6.0 percent in the coming years. Mr. Kustins stated that, “we forecast real GDP growth of above 6 percent over the medium term, considerably stronger than the ‘BBB’ median of 3 percent, supported by large investments in infrastructure and reforms to foster trade and investment, including through public-private partnerships (PPPs).” 

Fitch also outlined downside risks, which include a slower-than-expected global growth or a resurgence of inflation this year. Such developments might compel the Bangko Sentral ng Pilipinas (BSP) to prolong higher interest rates, Fitch said.  

Fitch Ratings Inflation Outlook 

Fitch Ratings has projected inflation to decrease to 4.0 percent this year and further ease to 3.5 percent in 2025. These forecasts align with the upper limit of the BSP target range of 2.0 to 4.0 percent. 

Nevertheless, the range of potential inflation outcomes remains biased towards upward movement due to uncertainties in prices, supply-side pressures, and adjustments to minimum wages and transportation fares. 

Fitch Ratings also noted that “We forecast the policy rate to decline to 4.5 percent by end-2025. This implies a widening policy rate differential between the Philippines and the US from 0.75 percent currently, the narrowest it has been since 2007.” 

S&P Global  

Philippines’ economic growth expected to settle at 5.9 percent in 2024 

S&P projects that the Philippines gross domestic product (GDP) will maintain an average growth rate of 5.9 percent for 2024 and 6.2 percent for 2025, consistent with its previous forecasts issued in November 2023. These projections fall short of the government’s growth targets of 6.0 to 7.0 percent and 6.5 to 7.5 percent for 2024 and 2025, respectively.  

Despite this, the Philippines is anticipated to rank as the second-fastest growing economy in the Southeast Asian region for this year and next year, trailing behind Vietnam, which is expected to grow at 6.1 percent and 6.7 percent, respectively.  

Heightened inflation and rate hikes may slow down growth  

Vincent Conti, a senior economist at S&P, highlighted that economic expansion is anticipated to be hampered by slow consumption, attributed to elevated inflation, and reduced investments due to rate hikes by the Bangko Sentral ng Pilipinas (BSP). Mr. Conti emphasized the prolonged period required for consumer recovery from income and savings setbacks.  

On the other hand, Yeefarn Phua, director at S&P, expressed confidence in the country’s robust growth trajectory, indicating potential support for its BBB+ credit rating. However, Ms. Phua cautioned that S&P might revise ratings downward in the event of an economic slowdown in the Philippines, leading to a deterioration in the long-term outlook and undermining the government’s fiscal policies.  

S&P Inflation Outlook  

For 2024, the credit ratings agency anticipates the Philippines’ inflation rate to sit at 3.4 percent. As for the following year, S&P sees inflation settling at 3.2 percent in 2025, which is in line with the BSP’s 2025 forecast.  

ASEAN+3 Macroeconomic Research Office (AMRO) 

6.3 percent growth predicted for Philippines in 2024 

The ASEAN+3 Regional Economic Outlook (AREO) 2024 report, released by ASEAN+3 Macroeconomic Research Office (AMRO), projected a 6.3 percent growth rate for the Philippine economy this year, consistent with its January forecast. This projection aligns with the government’s adjusted growth target of 6 to 7 percent for the current year.  

Looking ahead to the following year, AMRO anticipates a more active expansion for the Philippines, forecasting a growth rate of 6.5 percent, falling within the government’s revised growth target range for 2025 at 6.5 to 7.5 percent. If realized, AMRO’s 2025 GDP forecast for the Philippines would position the country as the fastest-growing economy in the ASEAN+3 region alongside Vietnam, which is also expected to reach a growth of 6.5 percent. Moreover, the projected growth rate for the Philippines in 2025 surpasses AMRO’s estimates of 4.2 percent for ASEAN+3 and 4.9 percent for ASEAN, signaling a robust economic outlook for the nation. 

Sustained household consumption expected to propel economic growth, but high inflation poses risk 

During a press briefing earlier this month, AMRO Chief Economist Hoe Ee Khor stated that the GDP outlook for both 2024 and 2025 is underpinned by sustained household consumption, a robust labor market recovery, and increased public spending and investments. While the report acknowledges the robust growth prospects in the near term, it also highlights that the country’s economic outlook is overshadowed by various risk factors and challenges. 

AMRO said,  

“High inflation is a risk, especially as a result of local supply shocks in the food sector and the impacts of geopolitical conflicts on international energy prices. These will exert upward pressure on inflation which can dampen domestic demand. Additionally, an economic slowdown in major trading partners and volatility in the global financial market, along with tighter financial conditions that increase funding costs for the government, corporates, and households, also pose risks.”  

AMRO Inflation Outlook 

Dr. Khor informed reporters that inflation continues to be a significant concern for the Philippines. In 2023, the country’s consumer price index rose to 6.0 percent from 5.8 percent in 2022. However, by March of this year, it had moderated to 3.7 percent. AMRO predicts that inflation will average 3.6 percent this year and 2.9 percent in 2025, both falling within the government’s target range of 2.0 to 4.0 percent.