MANILA, Philippines — The World Bank (WB) has retained its 5.8-percent economic growth forecast for the Philippines this year, short of the government’s target rate amid a number of downside risks both foreign and domestic.
In the June 2024 edition of the World Bank’s Philippines Economic Update Report, the multilateral lender said it projects the Philippines’ gross domestic product (GDP), or the sum of all goods and services produced within the country, will grow by 5.8 in 2024.
“Growth is expected to be driven by strong household consumption, sustained strength in the services sector, and improved trade stemming from a rebound in global demand for goods and the continued recovery of services exports such as tourism,” the World Bank said in a statement.
For 2025 and 2026, the GDP growth is expected to slightly increase to 5.9 percent.
Revised target
Despite the 2024 percent projection being an improvement from the actual 5.6 percent GDP growth in 2023, the forecast remains below the Marcos administration’s revised target of 6 percent to 7 percent.
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The report said that there remain risks to the growth outlook, citing external risks such as heightened geopolitical tensions, further fragmentation in global trade policy, and weaker-than-expected growth in China.
“An intensification of geopolitical tensions could lead to higher energy prices, which would reduce households’ disposable incomes. Further fragmentation of trade policies and increased trade protectionism would weigh on trade and could lead to an increase in commodity prices globally,” the World Bank said in its report.
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Meanwhile, several local issues it sees affecting the growth outlook are the prolonged episode of El Niño and a stronger-than-expected La Niña, which could drag the country’s farm output and put pressure on food prices.
“The threat of persistently high inflation could lead to a reduction in private consumption growth. In addition, it could lead to further delays in monetary policy normalization, dampening growth prospects,” it said.
Still, the World Bank’s inflation expectations are more on the optimistic side, projecting it would settle at 3.6 percent this year.
This would make it lower than the 6 percent inflation rate recorded in 2023, as well as within the government estimates of 2 percent to 4 percent.