The Asean+3 Macroeconomic Research Office (AMRO) has slashed its outlook for the Philippines this year following a slower economic growth in the third quarter.
According to AMRO’s 2024 Annual Consultation Report on the Philippines published on Monday, the country’s gross domestic product growth rate is expected to reach 5.8 percent in 2024 and accelerate to 6.3 percent in 2025, supported by strong domestic demand and a pickup in external demand.
In the quarterly update of the Asean+3 Regional Economic Outlook released in October, AMRO said the Philippines is projected to grow by 6.1 percent this year and 6.3 percent in 2025.
Just last month, the government reported the economy’s expansion slowed down to 5.2 percent in the third quarter, the lowest recorded since the 4.3 percent growth posted in the second quarter of the previous year.
This dragged the year-to-date average to 5.8 percent.
The average growth for the first three quarters, as well as AMRO’s latest full-year outlook, falls below the government’s six to seven percent target for the year.
The report said private consumption is anticipated to grow faster the rest of the year, supported by strong labor market conditions, lower inflation and robust overseas remittances.
However, growth prospects of the Philippines could be subject to several risks.
AMRO said higher inflation could dampen consumption.
It added potential sharp slowdown in the growth of major trading partners could pose risks as well.
“Heightened geopolitical risks could increase the likelihood of global supply disruptions and further global economic fragmentation,” the report said.
“Over the long term, the country’s potential growth could be constrained by insufficient infrastructure investment, vulnerabilities to climate change and prolonged scarring effects caused by the COVID-19 pandemic,” it added.
Meanwhile, headline inflation is projected to fall to 3.2 percent in 2024 from six percent in 2023, and maintain at 3.2 percent in 2025.
“The current fiscal-monetary policy mix is appropriate and can be adjusted further to support economic growth while rebuilding policy buffers,” the report said.
“If inflation continues to ease within the Bangko Sentral ng Pilipinas target band, there is room to adopt a less restrictive monetary policy stance,” it added.
