The World Bank has maintained its growth outlook for the Philippines this year at 5.8 percent.
According to the agency’s Philippines Economic Update report, the economy is forecast to accelerate from 5.5 percent last year and is seen to expand even further to 5.9 percent in 2025 and 2026.
Still, these estimates fall below the government’s growth assumptions of six to seven percent for 2024, 6.5 to 7.5 percent for next year and 6.5 to eight percent from 2026 until end of the administration’s term.
The multilateral agency said growth is expected to be driven by strong household consumption, sustained strength in the services sector and improved trade stemming from a rebound in global demand for goods and the continued recovery of services exports such as tourism.
The projection is based on the expectation that inflation will ease, the World Bank said, thus strengthening household purchasing power.
However, risks to the growth outlook include higher than expected inflation, extreme weather and climate change, global geopolitical tensions, tighter than expected financial conditions and the possibility of a sharper slowdown in China.
A prolonged El Niño event, and possibly a La Niña, could strain the domestic food supply and trigger an increase in inflation, the Washington-based agency said.
“To manage inflation, the continued implementation of non-monetary strategies is essential, including efforts to optimize supply and demand management and to secure timely and adequate imports of staple food items,” said Ralph Van Doorn, World Bank senior economist.
“The government needs to continue providing social assistance to vulnerable groups who are disproportionately affected by high food inflation,” he added.
The bank also said the Philippines needs to intensify steps to bolster community resilience against the effects of climate change and extreme weather to minimize economic disruption and sustain inclusive growth.
In addition, the government needs to improve the efficiency, transparency and inclusive use of public resources in climate adaptation, mitigation, response and rehabilitation, the report said.
“The current El Niño phenomenon exemplifies the severe disruptions that extreme weather events, intensified by climate change, can cause,” said Ndiamé Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand.
“These disruptions include impacts on educational services, reductions in farm yields and constraints on water and electricity supplies. Proactive measures to bolster community resilience against such climatic challenges are crucial and can significantly mitigate their adverse effects on the country’s growth outlook,” he added.
