The Philippines is likely to grow by 6 percent this year and by another 6.1 percent next year, higher than previous forecasts, the latest East Asia and Pacific Economic Update by the World Bank said.
In April, the World Bank said the Philippines will grow 5.8 percent in 2024 and by 5.9 percent in 2025.
The World Bank’s forecast this year is in line with government’s projection of 6 to 7 percent. Its outlook in 2024 is, however, slower than government’s projection of 6.5 to 7.5 percent.
The upward adjustments are made despite a projected slowdown in neighboring China in the next two years – 4.8 percent growth this year and 4.3 percent next year – compared to last year’s 5.2 percent.
The World Bank said developing East Asia and Pacific (EAP) will grow by 4.8 percent this year, slowing down to 4.4 percent next year. This year’s projection is slower than the 5.1 percent growth last year but still faster than that of the rest of the world in 2024.
“Growth in the rest of the region is forecast to increase from 4.7 percent in 2024 to 4.9 percent in 2025, benefiting from increasing domestic consumption, recovering goods exports, and a tourism rebound,” the World Bank said.
“Among the larger countries, only Indonesia is expected to grow in 2024 and 2025 at or above pre-pandemic levels, while growth in Malaysia, the Philippines, Thailand and Vietnam is expected to be below those levels,” the World Bank added.
Manuela Ferro, World Bank vice president for East Asia and the Pacific, said countries in the East Asia and the Pacific Region “continue to be an engine of growth for the world economy.”
“However, growth is slowing. To sustain strong growth over the medium-term countries in EAP must be proactive in modernizing and reforming their economies to navigate changing patterns of trade and technological change,” he said.
In the latest EAP update, a biannual publication, the World Bank said the region’s growth will likely be affected by shifting trade and investment, slowing growth in China and increasing global policy uncertainty.
China’s slowdown is attributed to persistent property market weakness, low consumer and investor confidence as well as structural challenges like aging and global tensions.
The World Bank in the update also noted that recent trade tensions between the United States and China have created opportunities for countries like Vietnam to deepen their role in global value chains by “connecting” major trading partners.
“Vietnamese firms exporting to the US saw sales grow almost 25 percent faster than those exporting to other destinations over the period 2018-2021. However, new evidence suggests that economies may be increasingly limited to playing a ‘one-way connector’ role as new, more stringent rules-of-origin on imports and export restrictions are imposed,” it said.
In addition to geopolitical uncertainty, heightened economic policy uncertainty could reduce industrial production and stock prices in EAP by up to 0.5 percent and 1 percent, respectively.
“East Asia’s development model — relying on open global markets and labor-intensive production — is being challenged by trade tensions and new technologies. The best response is to deepen trade agreements and to equip people with the skills and mobility to take advantage of the new technologies,” said Aaditya Mattoo, World Bank East Asia and Pacific chief economist.
