The World Bank has revised upward its gross domestic product (GDP) growth forecast for the Philippine for this year and 2025, which will be supported by domestic demand and public investment.
In its East Asia and Pacific Economic Update for October, the World Bank forecasts the country’s GDP to grow by 6% this year, up from its earlier 5.8% forecast. Meanwhile, the economic growth projection for 2025 was also revised upward to 6.1% from 5.9%.
These latest growth forecasts by the World Bank for the Philippines is better than those of China, Indonesia, Malaysia, Thailand, and Cambodia.
“The medium-term outlook remains favorable, averaging 6.0 percent in 2024-26. Strong growth will be driven by robust domestic demand, benefitting from more accommodative monetary policy, and sustained public investment,” said the World Bank.
“Private consumption will remain as the main growth engine, supported by steady remittance inflows, a healthy labor market, and lower inflation,” it added.
Improving investment activity is also expected to support growth as public investment will remain above 5.0% of GDP.
Furthermore, declining real interest rates will benefit private investment and household consumption, while the continuous improvement in the labor market and the easing of inflation will likely boost growth in household incomes.
The World Bank also sees the country’s poverty incidence declining but this will face some challenges.
“Poverty is expected to continue to decline but extreme climatic events pose risks. Poverty incidence is projected to decrease from 17.8% in 2021 to 13.6% in 2024 and further decrease to 11.3% in 2026, using the World Bank’s poverty line for lower-middle-income countries of $3.65 per day, 2017 PPP (purchasing power parity),” said the World Bank.
Meanwhile, the international lender sees risks to the growth outlook still tilted to the downside, while a slowdown in the global economy could weigh on growth. One particularly concern is China’s weaker-than-expected growth that can also slow down growth due to significant trade linkages with the Philippines.
“On the domestic front, food security may be challenged given persistent weakness in agriculture output, especially in the presence of a stronger-than-expected episode of La Niña. Future commodity price shocks caused by geopolitical conflicts, an increase in trade restrictions, and climate-related disasters remain the main downside risks,” the World Bank said.
(PHOTO FROM PNA)
