S&P trims PH 2024 growth forecast to 5.8%

This photo taken on January 29, 2019 shows a general view of the skyline of Manila. (Photo by Ted ALJIBE / AFP)

MANILA, Philippines — S&P Global Ratings trimmed its growth forecast for the Philippines this year and 2025.

The debt watcher placed the country’s gross domestic product (GDP) growth at 5.8 percent this year and 6.1 percent in 2025, just a tad lower than the 5.9 percent and 6.2 percent estimates given in March.

Both forecasts, however, are still below the government’s 6 to 7 percent and 6.5 to 7.5 percent growth targets for 2024 and 2025, respectively.

However, it noted that strong domestic demand and exports will support continued growth in the country.

Both forecasts are still below the government’s 6 to 7 percent and 6.5 to 7.5 percent growth targets for 2024 and 2025, respectively.

READ: Philippine economy grew 5.7% in Q1

The Philippine economy expanded by just 5.7 percent in the first quarter due to slower household consumption and government spending, but enough to outperform most of its neighbors in Southeast Asia.

“Domestic demand started out the year on a disappointing note, at least in part due to the high level of interest rates,” Vincent Conti, senior economist at S&P Global Ratings said on Monday.

Household spending, which accounts for around three-fourths to GDP, grew by 4.6 percent in the first three months, the slowest since the COVID-19 pandemic hit in 2020.

Export receipts

Total sales of local goods went up by 26.4 percent year-on-year to $6.22 billion in April, a turnaround from the revised 7.3- percent drop a month earlier, making the export receipts in March the highest level in five months.

READ: PH two-way trade showing signs of life, says Pantheon

Conti also said that a high-interest environment will challenge the full recovery of domestic demand.

“Nonetheless, there are favorable base effects in exports that, combined with relatively slower imports due to domestic demand, will provide growth support in the interim,” he added.

The government is also looking forward to rates finally coming down to support economic growth.

The Bangko Sentral ng Pilipinas (BSP) is carefully watching the US Federal Reserve, which kept its policy rate unchanged at 5.25 to 5.50 percent for a seventh straight meeting earlier this month.

The central bank is now eyeing one rate cut for this year as late as December, scaling back from three rate cuts it announced in early April.

The BSP has so far kept its benchmark rate steady at a 17-year high of 6.5 percent, following cumulative hikes of 450 bps to bring down inflation. INQ