S&P keeps 5.8% PH GDP growth forecast for 2024

Debt watcher S&P Global Ratings has kept its forecast of a 5.8-percent growth in the Philippines’ gross domestic product (GDP) this year and 6.1 percent in 2025, on hopes private consumption will pick up.

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.

Vishrut Rana, Asia-Pacific economist at S&P, said the main factor that will determine if these forecasts will come to pass is consumer spending.

READ: S&P trims PH 2024 growth forecast to 5.8%

If this picks up, there is a chance that the country’s economic growth will even hit the government’s target of at least 6 percent.

“So for the moment, we have 5.8 percent. There’s some upside risk to that number,” Rana said during an online discussion.

In the second quarter, private spending grew by 4.6 percent, slower than the 5.5-percent growth in last year, the slowest growth after the pandemic.

For next year, S&P expects the economy to grow by 6.1 percent, mainly driven by a recovery in domestic spending and a return to normal monetary policy.

READ: S&P raises Philippine outlook for 2026

“That’s a good segue into the currency. So what we’ve seen over the last month is significant strength in global currencies, particularly Southeast Asia currencies against the US dollar,” he said.

“We’ve seen appreciation in the range of between one and a half to 3 percent against the dollar or several currencies. The peso also appreciated over that time period based on expectation of easing out of the US Federal Reserve,” Rana added.

The Bangko Sentral ng Pilipinas (BSP) on Aug. 15 cut its policy rate by 25 basis points (bps), reducing the key rate to 6.25 percent. This was the first rate cut in almost four years or since November 2020, during the height of the pandemic.

The Monetary Board indicated that the BSP will pursue a “calibrated” shift toward a more accommodative monetary policy. BSP Governor Eli Remolona Jr. explained that this means the current easing cycle will be “gradual.” —Mariedel Irish U. Catilogo INQ