The Philippine economy is considered one of the most dynamic economies in East Asia and the Pacific region. The Philippines’ economy relies heavily on international trade and capital flow. Asia Fund Managers said between 2010 and 2019, the country’s GDP grew by an average of 6.4% each year.
In the November 2023 report of the World Bank, strong consumer demand and robust remittances bolstered the country’s economic dynamism.
The poverty rate declined from 23.3 percent in 2015 to 18.1 percent in 2021. This is despite the existence of global crises like the COVID-19 pandemic and other geopolitical events.
Many Filipinos are fired up to know whether the Philippine economy will perform better in 2024, keeping their hopes high for a resilient, sustainable, and prosperous society.
Here’s what research institutes and economists think:
PH GDP to reach 6%
As early as October 2023, the International Monetary Fund (IMF) projects that the Philippine economy is poised for faster expansion in 2024.
In a report following its 2023 Article IV consultation with the Philippines, the IMF Executive Board said the gross domestic product (GDP) growth of the country is expected to reach 6.0% next year. It says “supported by an acceleration in public investment and improved external demand for the Philippines’ exports.”
IMF added the government’s infrastructure program, the sectors’ opening to greater foreign investment, and private sector participation through PPP modalities will gradually crowd in private investment. It also added that it helps realize a growth potential of about 6–6½% over the medium term.
Shanaka Jayanath Peiris, the regional studies division chief at the IMF’s Asia and Pacific Department, stated this year’s growth is weaker. He said this is due to underspending in the government, monetary tightening, and a weak global environment. This situation is similar to many ASEAN countries.
“For this year, we are expecting a pickup because service exports are doing quite well. And as I said, the tech cycle will turn, so electronic exports also get a boost 2024, and public spending will also accelerate,” he added.
Economists' Viewpoints
Two economists have agreed on the IMF’s optimistic 2024 forecast. UST Economics Department Chairman Carlo Manapat said in an interview with PNA the IMF’s projection is based on private sector investments, government spending, and exports.
Manapat claimed that should these expectations come true, the IMF’s growth forecast would likely be achieved. On the other hand, Roberto Galang, dean of Ateneo de Manila’s John Gokongwei School of Management (JGSOM), explained three “tailwinds” for the government to delve into in 2024 to maximize the Philippines’ long-term potential.
According to Galang, it includes the “effects of the El Niño phenomenon on agriculture, the impact of right-of-way issues on infrastructure targets, and the repercussions of recent geopolitical and peace and order developments.”
The Dean also emphasized that the territorial dispute in the West Philippine Sea will have a huge bearing on the attainment of economic growth targets.
He expressed his gratitude that the current local peace and order situation has improved, especially with the peace agreements.
He also expressed his hope that peace will continue across the country, which will lead to more opportunities in tourism, agriculture, and infrastructure development according to the PNA article.
High projections from economists
Filipinos could expect Philippine economic growth to return to above 6% in 2024, as S&P Global Ratings Senior Economist Vincent Conti claimed.
In an article in Business World, Conti said that the impact of inflation and high borrowing costs would likely ease 2024.
“As the impact of inflation and rates dissipates this year, growth will likely return to above 6% in the medium term, still buoyed by strong underlying domestic demand and favorable demographics,” the economist was quoted to have said.
Meanwhile, for the University of Asia and the Pacific Senior Economist Cid L. Terosa, Philippine economic growth may be stronger in 2024 due to a better outlook for inflation and monetary policy.
“I expect inflation to be within the 3.5% to 4% range next year. As inflation becomes tamer, we expect monetary easing to follow suit,” Terosa said in a Business World article.
Upper 'middle-income' country
According to a report released by the Asian Development Bank, the Philippine economy is expected to climb further by 6.2% in 2024.
“The Philippines will grow at its potential this year and next and is on track toward its goal to become an upper middle-income country,” said ADB Philippines Country Director Kelly Bird.
“Like most other economies, the Philippines will be increasingly challenged by the impacts of climate change and the effects of emerging technologies on the labor market.”
The key to sustaining strong growth momentum, as Bird claimed, is keeping public infrastructure spending at levels above 5.0% of GDP.
“High-impact infrastructure projects that will help connect communities to markets and public services and provide access to jobs and livelihood will help increase rural incomes and support inclusive growth,” he said.
As to inflation, ADB reported that it will ease to 4.0%.
The report highlighted that inflation could slow down due to a few factors. These factors include severe weather conditions, such as the El Niño dry weather phenomenon, elevated global commodity prices, and second-round effects from higher transport fares and minimum wage hikes.
Moderate outlook
Meanwhile, ING would like to keep expectations to a minimum. In a report, ING Manila branch chief economist Nicholas Mapa said that despite the impressive growth report in the last quarters, the Philippine economy may not be as “robust as projected.”
Economist Mapa says growth might slow next year because people and the government will spend less, and interest rates are likely to keep rising.
Mapa maintained that authorities might have limited capacity to increase spending because of the country’s high levels of debt.
“However, we remain skeptical that it will be a reliable source of growth to power momentum in the coming quarters. The main reason for this is the limited space for fiscal authorities to increase spending due to elevated debt levels,” Mapa said in his report.
In a recent statement released by the Development Budget Coordination Committee (DBCC), the Philippine government narrowed its 2024 growth target to 6.5 to 7.5% from the previous range of 6.5 to 8%. The inflation rate, on the other hand, is expected to return to the target range of 2 to 4 percent from 2024 until 2028.
REFERENCES:
Philippine economy. https://asiafundmanagers.com/us/philippines-economy/
World Bank Group. (2023, December 16). Remittance flows continue to grow in 2023 albeit at slower pace. World Bank. https://www.worldbank.org/en/news/press-release/2023/12/18/remittance-flows-grow-2023-slower-pace-migration-development-brief
Manila Standard Business. (2023, October 19). IMF expects Philippine growth to pick up in 2024 – Manila Standard. Manila Standard. https://manilastandard.net/business/314381396/imf-expects-philippine-growth-to-pick-up-in-2024.html
IMF Executive Board Concludes 2023 Article IV Consultation with the Philippines. (2023, December 14). IMF. https://www.imf.org/en/News/Articles/2023/12/14/pr23449-philippines-imf-exec-board-concludes-2023-art-iv-consult
Economists: IMF’s PH growth projections for 2024 attainable. (n.d.). Philippine News Agency. https://www.pna.gov.ph/articles/1215685
PHL economy likely to bounce back in 2024. BusinessWorld Online. https://www.bworldonline.com/top-stories/2023/09/27/547965/phl-economy-likely-to-bounce-back-in-2024/
Bank, A. D. (2023, September 20). Consumer spending, public investment to support Philippine economic growth in 2023, 2024 — ADB. Asian Development Bank. https://www.adb.org/news/consumer-spending-public-investment-support-philippine-economic-growth-2023-2024-adb
Laqui, I. (2023, December 14). Philippine economic growth expected to ease in 2024 — think tank. Philstar.com. https://www.philstar.com/business/2023/12/14/2318636/philippine-economic-growth-expected-ease-2024-think-tank
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