The Asean+3 Macroeconomic Research Office (AMRO) has downgraded its forecasts for the Philippines for this year and next.
According to the latest quarterly update of the Asean+3 Regional Economic Outlook (AREO) released yesterday, the Philippines is projected to grow by 6.1 percent this year and 6.3 percent next year.
In comparison, AMRO had a more optimistic outlook in April, when it estimated expansions of 6.3 percent and 6.5 percent for the Philippine economy in 2024 and 2025, respectively.
AMRO’s last estimate for the Philippines’ growth this year is at the lower end of the government’s growth assumption of six to seven percent.
Meanwhile, the projection for 2025 falls below the government’s estimated band of 6.5 to 7.5 percent.
In a virtual briefing yesterday, AMRO chief economist Hoe Ee Khor said the latest forecasts took into account the data released so far in the first half of the year.
“We shaved down the growth not just for the Philippines but many of the countries in the region, because as it turns out, the recovery in the external sector was weaker than expected,” Khor said.
“Within the Philippines, growth is pretty robust and will pick up next year to 6.3 percent,” he added.
Khor said AMRO is looking at the Philippines’ data closely and may revise the outlook up in the second half if it shows that the economy has picked up more strongly.
Meanwhile, Khor also mentioned that the Philippines needs to work on the liberalization of the regulatory regime.
“The investment regime is somewhat more restrictive than some of the other peer economies in the region, and we see that they have taken steps to liberalize the measures, and they’ve managed to attract a bit of investment in the first half of the year,” Khor said.
“We think that the policy measures of the government will continue to attract more investment, and also with the improvement in the infrastructure gap will help to lift the growth potential,” he added.
AMRO also updated its projection for inflation at 3.3 percent this year and 3.1 percent next year.
In April, AMRO estimated that the country’s inflation rate for 2024 will be 3.6 percent and 2.9 percent for 2025.
Khor said central banks in the region appear to be waiting for the Fed to move first, although some of them have room to cut now if they wish to.
He added that inflation is pretty well-anchored in the region and growth remains robust.
AMRO, however, said downside risks to inflation remain, especially if geopolitical tensions worsen and trigger spikes in global commodity and shipping prices.
“The bad news is that the region’s outlook next year could be significantly affected by the outcome of the US elections. The good news is, the region has weathered similar shocks before,” Khor said.
“Our economies need to keep rebuilding policy space and pursue policies to enhance resilience to shocks,” he added.
