ADB tempers 2024 Philippine growth forecast to 6%

MANILA, Philippines — The Asian Development Bank (ADB) has cut its 2024 growth outlook on the Philippines, citing persistent threats from inflation and a projected slowdown of the global economy.

In its flagship “Asian Development Outlook” report released on Thursday, the Manila-based multilateral lender trimmed its gross domestic product forecast for the Philippines this year to 6 percent, from 6.2 percent previously.

For ADB, inflation—which was blamed for the sluggish 5.5-percent expansion in 2023—is still one of the major threats to the Philippine economy. The bank projects consumer prices to rise by an average of 3.8 percent this year, falling within the Bangko Sentral ng Pilipinas’ 2- to 4-percent target range.

“The reason for the downgrade is basically the upside risk to inflation, mainly how the extreme weather events affect the agricultural production,” Cristina Lozano, principal country specialist at ADB, told a press conference.

“The second reason is mainly external headwinds coming from a slower growth in advanced economies that are very much in commercial relations with the Philippines like the US [and] Japan,” Lozano added.

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If realized, the ADB’s less upbeat 2024 projection would match the lower end of the Marcos administration’s growth target of 6 to 7 percent, which was tempered from the old goal of 6.5 to 7.5 percent.

6.2% expansion in 2025

But the Philippines would still be tied with Vietnam as the best-performing economy in Southeast Asia this year, if ADB’s projection comes true. It would also outperform the rest of Asian developing economies, which are forecast to grow 4.9 percent on average.

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“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,” said ADB Philippines country director Pavit Ramachandran.

Next year, the ADB projects the economy of its host country to expand at a faster rate of 6.2 percent, albeit below the government’s target of 6.5 to 7.5 percent for 2025.

“The outlook is for growth to pick up in 2024 and 2025 amid moderating inflation and monetary easing,” the ADB said in its report.

“Promoting higher levels of private sector participation in the economy will be vital to further raise growth and productivity. Building on structural reforms and further measures to enhance the investment climate will support this agenda,” the bank added. —Ian Nicolas P. Cigaral