The Philippines is poised to be the second fastest-growing economy in Southeast Asia this year and in 2025—just behind Vietnam—based on the latest outlook of the Asean+3 Macroeconomic Research Office (Amro), which left its growth projections for the local economy untouched.
In the quarterly update to its flagship Asean+3 Regional Economic Outlook released on Thursday, Amro retained its gross domestic product (GDP) growth forecast for the Philippines at 6.1 percent for 2024, and 6.3 percent for next year.
This would make the country the second best performing economy in Asean if Amro’s predictions come to pass, trailing behind Vietnam which is projected to grow by 6.2 percent and 6.6 percent in 2024 and 2025, respectively.
Nevertheless, the Philippines would still outperform the entire Asean, Amro said as it pegged an average GDP growth rate of 4.7 percent and 4.9 percent for the region this year and next.
But growth would still fail to hit the 6 to 7 percent official target of the Marcos administration in 2024, and would fall short of the 6.5 to 7.5 percent goal for 2025. At a press conference, Amro chief economist Hoe Ee Khor said growth of the domestic economy would be supported by higher government spending and investments, as well as expansion in services exports.
“I think the Philippines is well supported. We know that 6.1 percent is below the government’s [target], but it’s still among the strongest in the region, as you can see,” Khor said.
Latest data showed the economy grew 6.3 percent in the second quarter. But analysts had said the figure was magnified by favorable base effects that masked the 4.6 percent growth in consumption, a pace that was uncommonly low for the Philippines.
To help stimulate household spending, the Bangko Sentral ng Pilipinas (BSP) in August cut the policy rate by a quarter point to 6.25 percent, kicking off what Governor Eli Remolona Jr. had called a “gradual” easing cycle.
By reducing borrowing costs, the BSP wants to encourage bank lending and consumption. Amro’s Khor said the start of the cutting cycle in the United States would allow central banks in the region, including the BSP, to make additional easing moves to boost GDP growth.
“An increasing number of central banks worldwide have begun easing monetary policy, and China has recently announced a broad set of stimulus measures to support its economy. These actions will have positive spillover effects on the rest of region,” he said.