MANILA, Philippines —The Marcos administration will likely miss its economic growth target for this year and next, although the Philippines will remain one of the fastest-growing economies in East Asia and Pacific despite a projected regional slowdown amid sluggish growth in China, the World Bank said.
In its “Global Economic Prospects” report released on Wednesday, the Washington-based lender said the Philippines is projected to grow 5.8 percent in 2023 and 2024.
If the forecast is realized, growth will settle below the government’s ambition of powering up the economy by 6.5 to 7.5 percent this year, and by 6.5 to 8.0 percent from 2025 until the end of President Marcos’ term in 2028.
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While the Philippines is expected to miss its growth targets, the World Bank said the country was still poised to outperform most of its peers in the region. Based on the multilateral lender’s latest forecasts, the Philippine economy is projected to grow faster than China (4.3 percent), Thailand (3.1 percent) and Indonesia (4.9 percent) in 2025.
The Philippines is also seen outperforming the East Asia and Pacific region which, on average, is projected to decelerate to 4.5 percent this year and to 4.4 percent in 2025.
“The baseline growth forecast for the region carries downside risks, primarily centered around the potential for weaker-than-expected growth in China and heightened geopolitical tensions,” the Bank said.
“The conflict in the Middle East could escalate, increasing uncertainty and disrupting energy supply. Other downside risks include prolonged global trade weakness, tighter-than-expected financial conditions, and damaging climate change-related extreme weather events,” it added.
Last month, the inter-agency Development Budget Coordination Committee (DBCC) tempered its gross domestic product (GDP) growth target for 2024 to 6.5 to 7.5 percent, from the previous goal of 6.5- to 8-percent expansion.
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The less upbeat outlook next year was expected. At present, the biggest worry for the government is the prolonged El Niño dry spell, which is predicted to last until the second quarter of 2024 and hit 65 provinces in the country, or 77 percent of all provinces in the Philippines.
Another challenge for the economy is the high interest rate environment that could hurt consumption and investments.
But the DBCC retained its 6 to 7 percent growth goal for 2023 as “momentum is expected to continue for the rest of the year and surpass that of our neighboring countries.”
With the year-to-date average growth now at 5.5 percent, the economy will have to expand by 7.2 percent in the fourth quarter to attain at least the low end of the government’s 6- to 7-percent growth target for 2023.Compared to the World Bank, HSBC Research gave a less optimistic outlook on the economy.
Still ‘excellent’
In a separate report, HSBC said that it expects the Philippines to grow 5.3 percent this year. Next year, HSBC expects a faster growth rate of 5.8 percent, the same as World Bank’s projection.
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While the projections are below the 6-percent growth that the country saw in recent years, Aris Dacanay, Asean economist at HSBC Research, said the figure was still “excellent.”
“We do think the Philippines will move sideways compared from 2023 to 2024,” Dacanay told reporters in a press chat on Friday.
“It’s good to know that even though we’re not used to 5.3 percent, we’re used to 6.5 percent … 5.3 percent is still an excellent number compared to what everyone is going through today,” he added. —Ian Nicolas P. Cigaral